After looking at 3D Systems Corporation’s (NYSE:DDD) latest earnings announcement (30 September 2018), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether 3D Systems’s performance has been impacted by industry movements. In this article I briefly touch on my key findings.
How Did DDD’s Recent Performance Stack Up Against Its Past?
DDD is loss-making, with the most recent trailing twelve-month earnings of -US$52m (from 30 September 2018), which compared to last year has become more negative. However, the company’s loss seem to be contracting over the medium term, with the five-year earnings average of -US$95m. Each year, for the past five years DDD has seen an annual increase in operating expense growth, outpacing revenue growth of 3.7%, on average. This adverse movement is a driver of the company’s inability to reach breakeven.
Scanning growth from a sector-level, the US tech industry has been growing its average earnings by double-digit 26% over the previous twelve months, and a more muted 3.2% over the previous five years. This growth is a median of profitable companies of 10 Tech companies in US including Xerox, Western Digital and NetApp. This means whatever uplift the industry is profiting from, 3D Systems has not been able to realize the gains unlike its industry peers.
Since 3D Systems is currently unprofitable, with operating expenses (opex) growing year-on-year at 11%, it may need to raise more cash over the next year. It currently has US$92m in cash and short-term investments, however, opex (SG&A and one-year R&D) reached US$369m in the latest twelve months. Even though this is analysis is fairly basic, and 3D Systems still can cut its overhead in the near future, or raise debt capital instead of coming to equity markets, the analysis still helps us understand how sustainable the 3D Systems’s operation is, and when things may have to change.
What does this mean?
3D Systems’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to predict what will occur going forward, and when. The most valuable step is to examine company-specific issues 3D Systems may be facing and whether management guidance has consistently been met in the past. You should continue to research 3D Systems to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for DDD’s future growth? Take a look at our free research report of analyst consensus for DDD’s outlook.
- Financial Health: Are DDD’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.