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3D Systems: Long-Term Story Not Impacted By Consumer

by:Tuowei     2019-06-09

3d system (NYSE:DDD)declined 9. 24% and 4.

51% on December 28 and 29, after the announcement in early 2016 to stop its $999 consumer 3D printing platform Cube (

Press release here).

As a result, DDD expects inventory write costs to be $19 to $25 million

The impact of income is about 2%.

After experiencing major industry headwinds and below-standard internal development (

Problems with dealers and some printing technology, especially metal-

Technology based)

Despite multiple acquisitions, this actually halted revenue growth, with the stock down 72% in 2015.

My assessment of DDD is based on the following points: recent historical review of DDD follows 3D printing (

Or additive manufacturing)

Since the beginning of 2014, DDD and other industry leaders including Stratasys (NASDAQ:SSYS)

Shares rose sharply.

Although DDD achieved a huge revenue growth from 2010 to 2013 (ranging 40-55% p. a. )

, The valuation of DDD at its peak is only in the future 3-5 years -

Very unrealistic assumptions

Stocks fell by more than 60% in 2014 as growth eased and profitability fell, which seems to be a logical result because broader markets, particularly growth investors, are disappointed.

more realistic view of DDD and the industry as a whole began to emerge, ending the hype.

In 2015, the 3D printing industry fell sharply.

DDD is strongly affected, and 2015 of revenue is currently expected to be below 2014 ($653. 7 million)

Despite the acquisition of botObjects Co. , Ltd. , Cimatron Ltd.

And Easyway Design and Manufacturing Company.

I think the two main factors driving this broader industry are: both DDD and SSYS have been hit hard, driven by stagnant growth and projected continued decline, DDD and SSYS3% and 70.

YTD was 2% in 2015.

I have started in DDD in recent months (and others)

Based on pushing stocks into attractive areas and my long term

The current soft demand environment is temporary and growth will eventually recover (

Currently, I expect it to resume at the end of 2016/early 2017 after the HPQ release).

In addition to revenue stagnation/decline, it is difficult for DDD to maintain profitability as it has had to digest more than 20 acquisitions since 2013, SG & has grown by 1700 basis points since its 2011 low of 26. 0% to 43.

Revenue of 1% LTM 09/15 (

Source: CapitalIQ, company filing document;

Note: SG & for DDD report includes D &).

Due to the significant increase in SG & a, EBITDA and EBITDA profit margins are affected, which in turn has a meaningful impact on EPS. (

Source: CapitalIQ filed by the company)Assessment -

DDD is taking the right steps

The growth environment, the basic story of 3D printing, as I said before, I think, the soft demand environment in 2015 is a temporary phenomenon driven by the huge demand of previous years and the highly anticipated market entry of HPQ. with the slow recovery of demand growth at the end of 2016/early 2017, as long as the broader macroeconomic environment remains supportive.

Many industry research institutions and consultants continue to predict a bright future in the field of 3D printing (

According to the research report, the market growth rate is 20%-

45% to 2020

See an example here).

I personally believe that 3D printing has no less than revolutionary potential for a large number of end markets and their manufacturing processes, including aerospace, defense, industry, construction/housing, automotive, and healthcare.

While there must be a lot of uncertainty about the time and speed 3D printing takes, I am fundamentally confident that 3D printing will continue to exist, which is becoming more and more important for the manufacturing process.

When I invest, the investment range is 5-

Plus working in an undervalued company for many years, I think the temporary low growth or no growth conditions and the corresponding low valuation are the best entry points for getting exposure.

As can be seen from the following, the valuation of DDD is at a historical low, driven by the current low growth.

In my opinion, they did not fully reflect the long term

The long-term prospects of the industry and industry leaders like DDD. (

Source: CapitalIQ filed by the company)

Also, given the decline in the ratio in recent years, I found it the only wise DDD to focus on improving profitability at the top-

It's hard to achieve line growth and cost growth

It is easier to achieve side improvements.

Again, I find that the market's response to DDD to stop its Cube platform is overreacting because the value proposition of DDD has not changed substantially for the following reasons: for most of my time in the industry, I feel like the industry is hyped up and its main players are heavily overrated.

So far, reality has begun, and given the significant long-term impact, I have begun to slowly build up the inventory of leading 3D printing companies including DDDterm potential.

In the words of Warren Buffett and Howard mark: 'What the wise man did at the beginning, what the fool did at the end.

'After two years of sharp stock price declines and a more realistic view of replacing investment fashion, I think this stock has started to oversell.

I think the market sentiment of DDD is terrible, and it seems to me to be a fairly positive, financially irrelevant news that could lead to a 13% drop in total prices in two trading days.

I think the relationship between incremental downside risk and long-term downside risk

The potential for a long rise has made DDD and other leading 3D printing companies such as SSYS the most interesting investment opportunity for an investor who feels comfortable

long-term stance on a promising industry that is currently out of favor.

As with most reverse investments, I think investors can now experience further losses by opening positions, as prices are largely driven by terrible emotions and have not yet found the bottom.

So I think the future 3-6 months (

Time may vary depending on when the channel indicates a recovery in demand growth)

The attractive entry point should be what I intend to use to further consolidate my position in DDD and other leading market players.

Main investment highlights and venture capital highlights: main risks: disclosure: I/we are DDD for a long time.

This article was written by myself and expressed my views.

I received no compensation (

In addition to Seeking Alpha).

I have no business relationship with any stock company mentioned in this article.

3D Systems: Long-Term Story Not Impacted By Consumer Printer Shutdown

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