Can 3D Systems (DDD) Surprise This Earnings Season? - Analyst Blog


3D Systems Corp. ( DDD ) is set to report second-quarter 2014 results on Jul 31 before the opening bell. Last quarter, it posted a negative surprise of 8.3%. Let's see how things are shaping up for this announcement.

Growth Factors in the Past Quarter

3D Systems, a bellwether in the 3D printing industry, had been on a downhill since the beginning of this year owing to the prevalent sluggishness in the industry.  

3D printing is a relatively new concept, which will likely take time to become popular. Furthermore, the industry is highly dependent on patented technologies, which play an important role in determining a company's performance.

As such, the company is focused on investing in research and development (R&D) for sustainable long-term growth. In the quarter, the company unveiled a number of innovating offerings like the novel iSense 3D Scanner, its high speed racetrack 3D printer and 3D Printed Bespoke Braces among others.

3D Systems remains focused on broadening its presence in materials, medical and metal industries, as suggested by its capital allocation strategies. The company recently raised its earnings and revenues guidance for 2014 after having completed the acquisition of Medical Modeling. The pending Robtec acquisition is also a positive for the long run.

The 3D printing market presents a favorable long-term opportunity as a large number of engineers, designers, architects and entrepreneurs are opting for 3D solutions for their primary designing and product modeling. However, high R&D expenditures along with increasing marketing expenses are likely to weigh upon the bottom line.

Earnings Whispers?

Our proven model does not conclusively show that 3D Systems is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. This is not the case here, as you will see below.

Zacks ESP :  Earnings ESP for 3D Systems is 0.0%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 14 cents.

Zacks Rank #3 (Hold) : 3D Systems carries a Zacks Rank #3 (Hold). Though a favorable Zacks Rank increases the predictive power of ESP, the company's ESP of 0.00% makes surprise prediction difficult. We caution against stocks with Zacks #4 and 5 Ranks (Sell-rated stocks) going into the earnings announcement, especially when the company is witnessing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Arch Capital Group Ltd. ( ACGL ), with Earnings ESP of +3.03% and a Zacks Rank #2 (Buy).

Infosys Ltd. ( INFY ), with Earnings ESP of +1.24% and a Zacks Rank #2.

Archer Daniels Midland Co. ( ADM ) has an Earnings ESP of +5.26% and a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: DDD , INFY , ADM , ACGL

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