Is 3D Systems Corporation (NYSE:DDD) A Financially Strong Company?
Mid-caps stocks, like 3D Systems Corporation (NYSE:DDD) with a market capitalization of US$2.36b, aren’t the focus of most investors who prefer to direct their investments towards either large-cap or small-cap stocks. However, generally ignored mid-caps have historically delivered better risk-adjusted returns than the two other categories of stocks. Let’s take a look at DDD’s debt concentration and assess their financial liquidity to get an idea of their ability to fund strategic acquisitions and grow through cyclical pressures. Note that this commentary is very high-level and solely focused on financial health, so I suggest you dig deeper yourself into DDD here.
See our latest analysis for 3D Systems
Does DDD produce enough cash relative to debt?
DDD’s debt levels have fallen from US$8.0m to US$7.4m over the last 12 months made up of predominantly near term debt. With this debt payback, DDD’s cash and short-term investments stands at US$119.3m , ready to deploy into the business. Moreover, DDD has produced US$16.5m in operating cash flow in the last twelve months, leading to an operating cash to total debt ratio of 224%, indicating that DDD’s operating cash is sufficient to cover its debt. This ratio can also be a sign of operational efficiency for loss making companies as traditional metrics such as return on asset (ROA) requires positive earnings. In DDD’s case, it is able to generate 2.24x cash from its debt capital.
Does DDD’s liquid assets cover its short-term commitments?
With current liabilities at US$225.6m, it appears that the company has been able to meet these commitments with a current assets level of US$440.1m, leading to a 1.95x current account ratio. Usually, for Tech companies, this is a suitable ratio since there is a bit of a cash buffer without leaving too much capital in a low-return environment.
Can DDD service its debt comfortably?
With a debt-to-equity ratio of 1.2%, DDD’s debt level is relatively low. This range is considered safe as DDD is not taking on too much debt obligation, which can be restrictive and risky for equity-holders. Risk around debt is extremely low for DDD, and the company also has the ability and headroom to increase debt if needed going forward.
Next Steps:
DDD has demonstrated its ability to generate sufficient levels of cash flow, while its debt hovers at a safe level. In addition to this, the company exhibits proper management of current assets and upcoming liabilities. This is only a rough assessment of financial health, and I’m sure DDD has company-specific issues impacting its capital structure decisions. I recommend you continue to research 3D Systems to get a more holistic view 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.
Valuation: What is DDD worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether DDD is currently mispriced by the market.
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.
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 editorial-team@simplywallst.com.
