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what 3d systems needs for a turnaround
by：Tuowei
2019-09-08
I am very interested in the 3D printer industry.
3D printers have a large number of applications in many industries.
Applications in the automotive, aerospace, healthcare, construction, and other industries ensure continued demand for 3D printers in the future.
However, the 3D system (NYSE:DDD)
Other people in the industry have been experiencing huge challenges for their businesses and stocks.
I pay special attention to the industry and 3D Systems, but I need to see the company improve on a few things in order to be a viable investment.
Currently, shares of the 3D system are being hit hard by a large number of short sellers.
Nasdaq said.
Com, short-term interest in 3D Systems is 35% floating.
This makes short selling very crowded and any major positive news puts short sellers at risk of short selling.
For this reason, I don\'t have any desire to short the stock at this point.
However, I will keep the stock on my watchlist and if there are some improvements in the industry and the company, I may change my neutral position to a positive one.
The overall product demand of 3D printing industry is very different.
According to different research companies, the estimate for growth is from 15.
In the next three to five years, the compound growth rate is 7% to 103%.
Even the lowest estimate is 15.
A 7% annual growth rate will result in strong demand and revenue growth for 3D printing manufacturers.
One of the challenges 3D Systems said during the first quarter call was that the currency issue had a negative impact on the demand for its products.
The euro and the yen fell against the United States. S.
The dollar caused most of the company\'s customers to postpone the purchase of new printers.
Monetary issues are considered to have a negative impact on revenues from automobiles, aerospace and health care.
This led to a 7% decline in organic revenue for q1.
Because it is so sensitive to currency, this may be one of the reasons why stocks are being short.
Traders are making a profit by making the 3D system a strong dollar/weak yen and euro deal.
So, I would like to see the euro/yen strengthen against the dollar.
Despite the strong dollar, dollar or strong customer demand in the automotive, aerospace and healthcare industries.
Both situations may help to change negative sentiment and lead to a reversal of the stock price.
The second-quarter earnings report, which will be released in August 6, will further reveal the needs of these industries.
ROE needs to improve another important thing. in order to cause changes in stock sentiment, the company\'s ROE needs to be changed (
Return on equity).
ROE has been declining since 2011 and is now negative due to negative net income reported by q1.
Before looking at the 3D system as an investment, I would certainly like to see an increase in net income and an increase in the company\'s ROE.
If the return on net assets continues to remain low, it will be difficult for the company to achieve the expected earnings per share growth rate.
It is unanimously estimated that the company\'s EPS will grow at an annual rate of 21% over the next five years.
The reason for the negative net income for the first quarter was that SG & a, R & D and revenue costs all doubled.
Digital rate when total income is increased by only 8. 8%.
SG & A grew the most to 51%.
The growth of SG & A is attributed to compensation and acquisitions.
R & D costs increased by 29%, and revenue costs increased by 14%.
The company will need to maintain revenue growth by controlling costs.
I want to see double, frankly.
Revenue growth year-on-year-to-
Year-on-year growth was lower than the cost of income.
The acquisition sounds great and strategic when they expand the company\'s portfolio, but if the cost is out of control then they may not be worth it.
So we have to monitor the impact of the acquisition on the top and bottom in the long run.
The biggest threat to competing with 3D Systems is competition from new big players like HP. Packard Co. (NYSE:HPQ).
HPQ has more resources to develop and sell 3D printers.
Currently, HPQ is expected to launch more
3D printing technology for jet fusion in 2016.
Given the expected growth in the 3D printing industry, I think 3D Systems, HPQ and other 3D printer manufacturers can all exist at the same time.
However, I also think that HPQ can easily become a leader in the industry, thus putting pricing pressure on 3D systems and other competitors.
HPQ claims it will change the industry and become lowcost producer.
HPQ also claims it\'s more
Jet fusion printers print 10 times faster than any printer currently on the market.
If this becomes a reality, HPQ\'s product could take up a large part of the market if it is well adopted.
If HPQ is able to produce 3D printers profitably, then it may become the most investment-worthy player in the field. Stratasys (NASDAQ:SSYS), ExOne (NASDAQ:XONE)
And voxeljet AG (NYSE:VJET)
It also represents additional competition for 3D Systems.
I don\'t think these smaller players will pose a huge threat to the 3D system, but they will eat up some of the market share of the 3D printer together.
In the past year and a half, the shares of these competitors have also been hit.
Another interesting competitor has yet to make a public deal, but claims to have breakthrough 3D technology for printing in a completely different way.
The company Carbon3D, which has technology, is called a clip (
Continuous Liquid Interface Production).
Instead of building a 3D production layer-by-
Like the current 3D printer, the clip technology grows parts from the resin pool.
It is said to be 25 to 100 times faster than traditional 3D printing. Ford (NYSE:F)
Compared to the traditional 3D printing, the clip technology of carbon3d was tested to make a buttonhole.
The test found that the clip technology produced a buttonhole in less than 1 minute.
Third, the material performance is closer to the performance of the required parts.
The parts produced with clips are strong in all directions, just like the injection parts.
It\'s not yet known how fast carbon3d\'s technology is commercially available.
However, the breakthrough in editing technology is high
High quality products.
This will be a factor to consider in the future.
I wouldn\'t place too much emphasis on PE or PEG ratios right now because I don\'t know if the analysts estimate that they are all that accurate.
The company has been struggling to meet the assessment, and management has been slow to provide their own guidance.
So, in order to determine the intrinsic value of the company, I did a DCF analysis.
Taking the 11% rate of return I asked for as a discount rate, assuming that the company is able to grow free cash flow at an average annual rate of 10% over the next 10 years and thereafter 3% per year, the intrinsic value of the stock is $5. 25.
Since the stock is trading at $14, there is not much margin of safety.
I would prefer to invest in companies that are less than or at least close to intrinsic value.
Recently, there has been a lot of pressure on the sale of stocks, and the value still does not look attractive.
3d printing is an interesting technology and I will focus on the industry.
However, before considering the investment in the 3D system, I need to see improvements in many indicators.
Growth in income, ROE, income, and free cash flow must all be significantly improved.
Improvements to these indicators will be associated with improvements in customer needs and significant reductions in operating costs.
I would also like to see how HPQ affects 3D printing space as the company can take up a large part of the market through printers scheduled to go public in 2016.
If there is no margin of safety, the stock is still not cost-effective.
So I\'m still watching.
Disclosure: I/we have no positions in any of the stocks mentioned and no plans to start any positions in the next 72 hours.
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 printers have a large number of applications in many industries.
Applications in the automotive, aerospace, healthcare, construction, and other industries ensure continued demand for 3D printers in the future.
However, the 3D system (NYSE:DDD)
Other people in the industry have been experiencing huge challenges for their businesses and stocks.
I pay special attention to the industry and 3D Systems, but I need to see the company improve on a few things in order to be a viable investment.
Currently, shares of the 3D system are being hit hard by a large number of short sellers.
Nasdaq said.
Com, short-term interest in 3D Systems is 35% floating.
This makes short selling very crowded and any major positive news puts short sellers at risk of short selling.
For this reason, I don\'t have any desire to short the stock at this point.
However, I will keep the stock on my watchlist and if there are some improvements in the industry and the company, I may change my neutral position to a positive one.
The overall product demand of 3D printing industry is very different.
According to different research companies, the estimate for growth is from 15.
In the next three to five years, the compound growth rate is 7% to 103%.
Even the lowest estimate is 15.
A 7% annual growth rate will result in strong demand and revenue growth for 3D printing manufacturers.
One of the challenges 3D Systems said during the first quarter call was that the currency issue had a negative impact on the demand for its products.
The euro and the yen fell against the United States. S.
The dollar caused most of the company\'s customers to postpone the purchase of new printers.
Monetary issues are considered to have a negative impact on revenues from automobiles, aerospace and health care.
This led to a 7% decline in organic revenue for q1.
Because it is so sensitive to currency, this may be one of the reasons why stocks are being short.
Traders are making a profit by making the 3D system a strong dollar/weak yen and euro deal.
So, I would like to see the euro/yen strengthen against the dollar.
Despite the strong dollar, dollar or strong customer demand in the automotive, aerospace and healthcare industries.
Both situations may help to change negative sentiment and lead to a reversal of the stock price.
The second-quarter earnings report, which will be released in August 6, will further reveal the needs of these industries.
ROE needs to improve another important thing. in order to cause changes in stock sentiment, the company\'s ROE needs to be changed (
Return on equity).
ROE has been declining since 2011 and is now negative due to negative net income reported by q1.
Before looking at the 3D system as an investment, I would certainly like to see an increase in net income and an increase in the company\'s ROE.
If the return on net assets continues to remain low, it will be difficult for the company to achieve the expected earnings per share growth rate.
It is unanimously estimated that the company\'s EPS will grow at an annual rate of 21% over the next five years.
The reason for the negative net income for the first quarter was that SG & a, R & D and revenue costs all doubled.
Digital rate when total income is increased by only 8. 8%.
SG & A grew the most to 51%.
The growth of SG & A is attributed to compensation and acquisitions.
R & D costs increased by 29%, and revenue costs increased by 14%.
The company will need to maintain revenue growth by controlling costs.
I want to see double, frankly.
Revenue growth year-on-year-to-
Year-on-year growth was lower than the cost of income.
The acquisition sounds great and strategic when they expand the company\'s portfolio, but if the cost is out of control then they may not be worth it.
So we have to monitor the impact of the acquisition on the top and bottom in the long run.
The biggest threat to competing with 3D Systems is competition from new big players like HP. Packard Co. (NYSE:HPQ).
HPQ has more resources to develop and sell 3D printers.
Currently, HPQ is expected to launch more
3D printing technology for jet fusion in 2016.
Given the expected growth in the 3D printing industry, I think 3D Systems, HPQ and other 3D printer manufacturers can all exist at the same time.
However, I also think that HPQ can easily become a leader in the industry, thus putting pricing pressure on 3D systems and other competitors.
HPQ claims it will change the industry and become lowcost producer.
HPQ also claims it\'s more
Jet fusion printers print 10 times faster than any printer currently on the market.
If this becomes a reality, HPQ\'s product could take up a large part of the market if it is well adopted.
If HPQ is able to produce 3D printers profitably, then it may become the most investment-worthy player in the field. Stratasys (NASDAQ:SSYS), ExOne (NASDAQ:XONE)
And voxeljet AG (NYSE:VJET)
It also represents additional competition for 3D Systems.
I don\'t think these smaller players will pose a huge threat to the 3D system, but they will eat up some of the market share of the 3D printer together.
In the past year and a half, the shares of these competitors have also been hit.
Another interesting competitor has yet to make a public deal, but claims to have breakthrough 3D technology for printing in a completely different way.
The company Carbon3D, which has technology, is called a clip (
Continuous Liquid Interface Production).
Instead of building a 3D production layer-by-
Like the current 3D printer, the clip technology grows parts from the resin pool.
It is said to be 25 to 100 times faster than traditional 3D printing. Ford (NYSE:F)
Compared to the traditional 3D printing, the clip technology of carbon3d was tested to make a buttonhole.
The test found that the clip technology produced a buttonhole in less than 1 minute.
Third, the material performance is closer to the performance of the required parts.
The parts produced with clips are strong in all directions, just like the injection parts.
It\'s not yet known how fast carbon3d\'s technology is commercially available.
However, the breakthrough in editing technology is high
High quality products.
This will be a factor to consider in the future.
I wouldn\'t place too much emphasis on PE or PEG ratios right now because I don\'t know if the analysts estimate that they are all that accurate.
The company has been struggling to meet the assessment, and management has been slow to provide their own guidance.
So, in order to determine the intrinsic value of the company, I did a DCF analysis.
Taking the 11% rate of return I asked for as a discount rate, assuming that the company is able to grow free cash flow at an average annual rate of 10% over the next 10 years and thereafter 3% per year, the intrinsic value of the stock is $5. 25.
Since the stock is trading at $14, there is not much margin of safety.
I would prefer to invest in companies that are less than or at least close to intrinsic value.
Recently, there has been a lot of pressure on the sale of stocks, and the value still does not look attractive.
3d printing is an interesting technology and I will focus on the industry.
However, before considering the investment in the 3D system, I need to see improvements in many indicators.
Growth in income, ROE, income, and free cash flow must all be significantly improved.
Improvements to these indicators will be associated with improvements in customer needs and significant reductions in operating costs.
I would also like to see how HPQ affects 3D printing space as the company can take up a large part of the market through printers scheduled to go public in 2016.
If there is no margin of safety, the stock is still not cost-effective.
So I\'m still watching.
Disclosure: I/we have no positions in any of the stocks mentioned and no plans to start any positions in the next 72 hours.
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.
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