Disappointment enters when investors glance at the company’s outlook. Although 3D Systems is calling for 2013 revenue between $440 million and $485 million and split-adjusted non-GAAP EPS between $1.00 and $1.15, analysts had profit margins pegged much higher. Before the call, expectations were for revenue of $442.2 million supporting an EPS of $1.58 – a sizable difference.
Is it time to panic?
Huge growth never comes cheap
Investors will need to adjust their own expectations for the company accordingly, but we Fools never prescribe panicking as a remedy for coping with uncertainty. I asked if investors were getting a little carried away with the 3-D printing industry and throwing inhibitions to the wind last month. Without making any novel conclusions, I simply noted that it would be awfully difficult for the company to grow at the expected 45% per year through 2016.
The high current P/E and forward P/E will be keeping me away from considering the company, but not everyone agrees. Anders Bylund recently pointed out that huge growth never comes cheap. In fact, our Rule Breakers newsletter thrives upon that idea. Fool co-founder David Gardner even likes it when companies are labeled “overvalued.” You may think he’s crazy, but as an early investor in Amazon.com, Inc. (NASDAQ:AMZN) and AOL, Inc. (NYSE:AOL), David has witnessed some crazy returns by taking a long-term view.
Foolish bottom line
No one, including myself, is questioning that the company is growing, but people are beginning to question how quickly and from which sources. Of course, the company has no control over the attainability of analyst expectations. All it can do is continue to push into new markets, strategically consolidate the industry, and help lead the 3-D printing industry to maturity. What do you think about the company’s earnings? Let me know in the comments section below.
The article Investors Are Not Happy With 3D Systems’ Outlook originally appeared on Fool.com and is written by Maxx Chatsko.
Fool contributor Maxx Chatsko has no position in any stocks mentioned. Check out his personal portfolio, his CAPS page, or follow him on Twitter @BlacknGoldFool to keep up with his writing on energy, bioprocessing, and emerging technologies.The Motley Fool recommends 3D Systems. The Motley Fool owns shares of 3D Systems and has the following options: Short Jan 2014 $55 Calls on 3D Systems and Short Jan 2014 $30 Puts on 3D Systems.
Editor’s note: To clarify the disclosure position outlined above, The Motley Fool owns shares of 3D Systems through both our Supernova and Pro real-money premium services. In addition to the shares it owns, our Pro premium service has written a “covered strangle” options position on 3D Systems, agreeing when the trade was set up to buy more shares at a lower price, or to sell existing shares at a higher price – while maintaining the ability to close either obligation any time. Finally, 3D Systems is a recommendation in Stock Advisor, which is not a real-money service.
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