3D Systems Prints Everything But Money
March 3, 2014 Leave a comment
3D Systems Prints Everything But Money
SPENCER JAKAB
Updated Feb. 27, 2014 4:33 p.m. ET
It is appropriate that a movie starring molded blocks of polymer, “The Lego Movie,” is tearing up the box office. Three-dimensional printing, a technology that can turn plastic and other materials into almost anything, has been a runaway hit on Wall Street recently.
That enthusiasm cooled slightly earlier this month when market leader 3D Systems Corp.DDD -1.72% issued a profit warning ahead of its fourth-quarter earnings release set for Friday. Per-share earnings are seen at 43 cents to 45 cents, down from 47 cents a year earlier. After soaring by nearly 900% over the last two calendar years, though, there still is plenty of froth to come off its share price.
True, the company didn’t cut its revenue-growth forecast for the quarter or the current year. On the other hand, it has been making acquisitions at a pace of about one a month since 2012, helping to bolster that top line—and its share count.
Some investors hold out hope that one day soon 3D Systems itself will get gobbled up at a chunky premium by the likes of Hewlett-PackardCo. HPQ -0.50% , which has expressed interest in the industry. Don’t hold your breath.
In its investor presentation, 3D Systems cites a third-party forecast that its industry could grow by a blistering compound annual rate of 19% through the end of this decade. That would leave the global market at $10.8 billion.
Three publicly listed 3-D printing companies alone have a combined market value of $14.6 billion today, though—slightly over half of that coming from 3D Systems. To put this into perspective, that exceeds the value of Xerox Corp. XRX +2.33% which, not so long ago, revolutionized the business of do-it-yourself 2-D printing.
Investors these days are forgiving of statistics like 3D Systems’ 2013 earnings multiple of 156 times. But it is arguably a lot less dominant than Xerox was back in the early 1960s or even Tesla Motors Inc. TSLA -0.18% is in the field of electric cars today.
One can be skeptical about 3D Systems without being a Luddite. The technology clearly holds tremendous promise, but its recent arrival at a price point that some consumers can afford has created unreasonable expectations.
Yes, 3-D printing may one day churn out anything from automobiles to artificial limbs. That doesn’t mean the business is a license to print money today.
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