Are 3D Systems Corporation (DDD) Printing Valuations Getting Ahead of Themselves?

3D Systems now trades at around 82x TTM earnings, and Stratasys isn’t far behind at about 77x. This is high by almost any standards. The forward P/E is something of a consolation however, sitting at around 35x forward earnings for both companies.  Assuming a TTM P/E of about 30, which is a lot more reasonable, these companies would be trading at a considerably lower price. Taking 3D Systems’ TTM EPS of $0.68, and giving them a more or less acceptable TTM P/E of 30, the stock would be trading at around $20.40, less than half the current price of about $56. Stratasys on the other hand, taking the TTM EPS of $0.85, would be trading at $25.5, versus their current price of around $66.

Bottom Line

So what is it exactly that I’m trying to say in this article? I would not dare suggest that the rally in 3D printing systems is over, because it is indeed a promising technology and companies operating in the sector are growing earnings impressively. However, based on current valuations, it appears as if there is plenty of possible downside should the market decide to turn on these two industry darlings, which leads me to be cautious on both.

The article Are 3D Printing Valuations Getting Ahead of Themselves? originally appeared on Fool.com and is written by Daniel James.

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