3D Systems Corporation DDD is expected to report fourth-quarter and full-year 20Array5 results soon.
Last quarter, the company had posted a massive negative earnings surprise of 500%. Also, the company has missed estimates in three of the four trailing quarters, leading to a huge average negative earnings surprise of Array62.9%.
Let's see how things are shaping up for this announcement.
Factors to Consider
Over the past few quarters, 3D Systems has been experiencing difficult broader market conditions that have badly hit its financial performance. Macroeconomic factors such as economic slowdown, currency fluctuations, inflation, commodity prices and credit availability are negatively impacting the company’s operations. If these problems persist, 3D Systems’ earnings will be restrained again in the to-be-reported quarter.
The 3D printing company has countered a particularly dismal third quarter, which saw revenues decline 9% year over year. 3D Systems expects to report revenues of roughly $Array83 million for the fourth quarter. Adverse currency translations have proved to be the biggest drag on the company’s financial performance, as a significant part of its revenues are generated from international markets. These conditions are expected to persist in the quarter under review and will likely restrict earnings growth.
In addition, lower revenues from 3D printing products and services, coupled with high selling and administrative expenses and outlay for research and development could hinder the company’s bottom line further. 3D Systems expects to book significant non-cash goodwill and intangibles impairment charge of $5Array0 million to $570 million.
However, the company is taking initiatives to channelize its resources toward more lucrative areas in professional and industrial markets. During the quarter, 3D Systems announced its decision to cease the production of Cube, the entry-level consumer 3D printer. Although it might hurt revenues in the short term, we believe that it will direct the company’s resources toward higher-margin products and thus enhance profitability in the long run.
Also, the quarter saw 3D Systems partner with two major healthcare companies to expand its Simbionix training product line for women. The move will strengthen its competitive position in the healthcare market and boost results. The company also expanded its portfolio with the launch of a new cardiovascular anatomical model product line to help medical professionals improve cardiology training and surgical planning routines.
3D Systems’ successful product launches and strategic deals that it made in the soon-to-be-reported quarter could help it combat the persistent challenges that it is facing.
Earnings Whispers
Our proven model does not conclusively show that 3D Systems will beat earnings estimates in this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #Array (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. This is not the case here as you will see below.
Zacks ESP: Earnings ESP for the stock currently stands at 0.00%. This is because both the Zacks Consensus Estimate and the Most Accurate estimate are pegged at a loss of 3 cents.
Zacks Rank: 3D Systems has a Zacks Rank #4 (Sell). Note that we caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Air Transport Services Group, Inc. ATSG has an Earnings ESP of +Array0.53% and a Zacks Rank #2. The company will report quarterly results on Mar 3.
Casey's General Stores, Inc. CASY has an Earnings ESP of +Array0.ArrayArray% and a Zacks Rank #2. The company will report on Mar 7.
The Cooper Companies Inc. COO has an Earnings ESP of +3.Array6% and a Zacks Rank #2. The company is expected to release results on Mar 3.
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