Is 3D Systems Corporation (DDD) Headed In The Right Direction?

Still, fellow Fool Alex Planes rightly voiced concern that both 3D Systems’ revenue and gross profit was sequentially flat from the fourth quarter, while net income has declined for three consecutive quarters. In addition, despite higher profitability, first-quarter cash flow was also lower than in the fourth quarter 2012.

To be fair, however, this certainly wasn’t lost on analysts during yesterday’s earnings conference call, and they wasted no time grilling management with questions to see what was up.

Curiously enough, 3D Systems management repeatedly cited timing of printer sales as the main causes of moderation in growth for their health care and services segments, saying they don’t expect it to “impede on the growth trajectory” as the year goes on.

When asked about falling year-over-year cash flows, CFO Damon Gregoire once again responded by saying the culprit was a combination of continued higher sales to resellers which built receivables, and the timing of their respective payable accounts.

Additionally, the company expects gross margin to continue its relentless upward climb as the year progresses, especially as they continue integrating the recently acquired Geomagic into their business.

As a result, despite having only accounted for 21% of the low end of their EPS guidance, management is sticking by its previous 2013 estimates of earning between $1.00 and $1.15 per share on revenue of $440 million-$485 million.

Foolish final thoughts
All things considered, while 3D Systems’ first quarter wasn’t perfect, it went a long way toward restoring investors’ confidence that the company can deliver on its promises. I’ll be hanging tight to my own shares, but with the stock once again trading for more than 80 times trailing earnings, the importance of that confidence can’t be understated.

The article Is 3D Systems Back on Track? originally appeared on Fool.com.

Motley Fool contributor Steve Symington owns shares of 3D Systems. The Motley Fool recommends 3D Systems and Stratasys. The Motley Fool owns shares of 3D Systems and Stratasys and has the following options: Short Jan 2014 $36 Calls on 3D Systems and Short Jan 2014 $20 Puts on 3D Systems.

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