A month has gone by since the last earnings report for 3D Systems (DDD). Shares have added about 15.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is 3D Systems due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
3D Systems Q1 Loss Wider Than Expected, Sales Down Y/Y
3D Systems reported first-quarter 2023 non-GAAP loss of 9 cents per share, wider than the Zacks Consensus Estimate of a loss of 8 cents. The bottom line came in wider than the prior-year quarter’s loss of 6 cents per share.
In the first quarter of 2023, 3D Systems reported revenues of $121.2 million, down 8.8% from the year-ago quarter, which missed the consensus mark of $130.4 million. Excluding the impact of business divestments in 2023 and on a constant currency basis, revenues decreased 6.5% year over year.
3D Systems’ first-quarter performance reflected impacts of inflationary pressure and foreign exchange risks, among other ongoing macroeconomic constraints.
Q1 in Detail
In the first quarter, product revenues represented 69.6% of the total revenues and decreased 16.1% to $84.4 million. Revenues from Services, which accounted for 30.4% of revenues, climbed 13.6% year over year to $36.8 million.
Revenues from the Healthcare segment fell 24.3% year over year to $48.7 million. The figure decreased 19.8% from the prior quarter. Excluding the impact of business divestments, the segment’s revenues decreased 23.4% year over year.
The Industrial Division revenues increased 5.6% year over year to $72.5 million while it went up by 0.7% sequentially. Excluding the impact of business divestments, the unit’s revenues increased 9.3%. The unit witnessed solid demand for products as well as materials.
During the first quarter of 2023, 3D Systems’ non-GAAP gross profit decreased 12.4% year over year to $47.2 million. Consequently, the non-GAAP gross profit margin contracted 160 basis points to 39%. This decrease was because of year-over-year product mix changes, due to divestitures and increased supply chain disruptions.
Adjusted EBITDA was negative $10.1 million. The margin of negative 8.3% reflected the inflationary impact on input costs and gradual investments for portfolio & business growth.
Balance Sheet Details
The company exited the first quarter with cash, cash equivalents and short-term investments of $529.9 million, lower than the prior quarter's $568.7 million. As of Mar 31, 2023, 3D Systems had a total debt of $450.2 million, up from the previous quarter’s $449.5 million.
In first-quarter 2023, the company utilized $27.7 million of cash from operational activities.
3D Systems expects 2023 revenues between $545 million and $575 million.
The company projects non-GAAP gross margin to be 40-42%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 15% due to these changes.
At this time, 3D Systems has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, 3D Systems has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
3D Systems is part of the Zacks Computer - Mini computers industry. Over the past month, Apple (AAPL), a stock from the same industry, has gained 4.3%. The company reported its results for the quarter ended March 2023 more than a month ago.
Apple reported revenues of $94.84 billion in the last reported quarter, representing a year-over-year change of -2.5%. EPS of $1.52 for the same period compares with $1.52 a year ago.
For the current quarter, Apple is expected to post earnings of $1.18 per share, indicating a change of -1.7% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.2% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Apple. Also, the stock has a VGM Score of C.
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