3D printing is an industry with the potential to permanently transform the global industrial and manufacturing sectors. Additive Manufacturing (AM) technologies are now being used in aerospace, medicine and healthcare, automobiles, and even fashion industries. COVID-19 pandemic-driven supply chain limitations have expedited the growth of the 3D printing industry over the past year, while  international trade barriers have incentivized companies operating in the sector to manufacture key raw materials and products with higher domestic demand.

With technological advancements and falling production costs, 3D printing is expected to increasingly define the global industrial and manufacturing markets. With many countries adopting protectionist trade policies, investments in additive manufacturing should rise significantly. These factors have  resulted in a 3D printing industry rally over the past year, as evidenced by 3D Printing ETF’s (PRNT) 92.3% returns over the past year.

However, widespread commercial use of AM is still a dream because most companies don’t yet have adequate infrastructure to develop large-scale products in the near term. Thus, much of the recent stock gains are based on broader investor optimism alone, making 3D printing stocks such as 3D Systems Corporation (DDD - Get Rating), The ExOne Company (XONE - Get Rating) and Voxeljet AG (VJET - Get Rating) highly overvalued currently given their weak revenue and earnings outlook in the near term. So, we think these stocks are best avoided now.

3D Systems Corporation (DDD - Get Rating)

DDD provides three-dimensional (3D) printing solutions, including 3D printers, print materials, software, on demand manufacturing services and digital design tools. The company’s solutions support applications in a range of industries, including healthcare, aerospace, automotive and durable goods. Its precision healthcare capabilities include simulation, virtual surgical planning (VSP), and the printing of medical and dental devices and surgical guides and instruments.

This month DD introduced  a novel High Speed Fusion industrial 3D printer platform and material portfolio, developed in collaboration with Jabil Inc. (JBL). This unique HSF family of products, which  includes the Roadrunner 3D printer, is expected to provide the best economics of any high throughput industrial fused filament offering in the market today.

Also this month,  DDD was  selected by Raytheon Technologies and the Combat Capabilities Development Command (DEVCOM) Army Research Laboratory (ARL) as part of a research project. The company also plans an expansion of its Rock Hill, South Carolina, location.

However, the company’s financials are not promising. DD is scheduled to release its fourth quarter and full year 2020 (ended December 31, 2020) financial results on March 1, 2021. Its  total revenue came in at $135.15 million for the third quarter ended September 30, 2020, which represents a 13% year-over-year decline. Its industrial sales decreased 23.8% year-over-year to $75.30 million. The company widened its net loss from $16.84 million for the third quarter of 2019 to $72.89 million for the third quarter of 2020. DDD’s non-GAAP loss per share came in at $0.03.

A consensus revenue estimate of $550.38 million for the fiscal year 2020 represents a decline of 12.5% year-over-year. The company’s EPS is expected to remain negative for the fiscal year 2020. In terms of forward enterprise value/sales, the stock is currently trading at 8.39x, 91.1% higher than the industry average  4.39x.

DDD closed yesterday’s trading session at $37.44, 33.7% below its 52-week high of $56.50.

DDD’s POWR Ratings are consistent with this bleak outlook. The stock has an overall rating of D, which equates to Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

The stock also has a D grade for Stability, Sentiment and Value. We have also graded DDD for Growth, Quality and Momentum. Click here to access all DDD’s ratings.

DDD is ranked #2 of 6 stocks in the F-rated Technology – 3D Printing industry.

The ExOne Company (XONE - Get Rating)

Founded in 2005, XONE is a provider of 3D printing machines and 3D printed and other products, materials and services to industrial customers. In addition to  selling 3D printing machines and printing products, the company also supplies associated materials, including consumables and replacement parts and other services including training and technical support that are necessary for purchasers of its 3D printing machines to print products. The company’s 3D printing machines build or print products with the help of computer-aided drafting (CAD) models.

This month  the company announced that ABC Corporation is now an authorized channel partner to sell XONE’s industrial solutions in South Korea. The company also announced that  TCL Hofmann is now  an authorized channel partner. It will sell XONE’s industrial solutions in Australia and New Zealand. XONE was awarded a United States’ Department of Defense contract on February 16 to develop a fully operational, self-contained 3D printing “factory” housed in a shipping container. Further, in an exclusive partnership with Rapidia, the company has launched the ExOne Metal Designlab printer and X1F advanced furnace.

The company’s recurring revenue (3D printed and other products, materials and services) of $6.90 million was flat for the third quarter ended September 30, 2019 compared to the year-ago period. This was due  primarily to a continued decline in demand resulting from  COVID-19. The company reported a net loss of $3.27 million for the third quarter of 2020. Also, its gross margin came in at 22.4% compared to 26.4% reported during the third quarter of 2019.

A consensus revenue estimate of $16.90 million for the quarter ended December 31, 2020 represents a decline of 3.6% year-over-year. The company’s EPS is expected to remain negative for the quarter ended December 31, 2020. In terms of forward enterprise value/sales, the stock is currently trading at 14.07x, 593.1% higher than the industry average of 2.03x.

XONE closed yesterday’s trading session at $39.63, 40.4% below its 52-week high of $66.48.

XONE’s POWR Ratings are consistent with this bleak outlook. The stock has an overall rating of D, which equates to Sell in our proprietary rating system.

The stock also has an F grade for Value and D for Stability and Sentiment. We have also graded XONE for Growth, Quality and Momentum. Click here to access all XONE’s ratings.

XONE is ranked #6 in the same industry.

Voxeljet AG (VJET - Get Rating)

Headquartered in Friedberg, Germany, VJET is engaged in the manufacture and sales of 3D printers. The company operates primarily  through two segments — Systems and Services. VJET  provides its products and services to industrial and commercial customers involved in various fields, such as aerospace, automotive, engineering, architecture, science, medicine, art, film and entertainment.

Last October VJET received a follow-up order for three additional units of its new high-speed 3D printer VJET X.  The company transferred the listing of its American Depositary Shares (ADS) from the NYSE to NASDAQ, which has been effective since August 28, 2020. In September 2020, VJET advanced its expansion in India with another sale of its largest industrial 3d printer — the VX4000. The Indian steel casting expert Peekay Steel Castings (P) Ltd has also decided to invest in the VX4000.

The company’s services revenues decreased 20.6% year-over-year to kEUR 2,222 for the third quarter ended September 30, 2020. This was mainly due to lower revenue contributions from the company’s subsidiary voxeljet America Inc. due to the COVID-19 pandemic,  which led to a significant decrease in demand from the company’s clients in North America. The company reported a net loss of kEUR 4,035 for the third quarter, which widened from the net loss of kEUR 3,735 reported for the third quarter of 2019. In terms of trailing-12-month enterprise value/sales, VJET is currently trading at 5.05x, 140.5% higher than the industry average  2.10x.

VJET closed yesterday’s trading session at $18.35, 54.1% below its 52-week high of $40.00.

VJET’s POWR Ratings are consistent with this bleak outlook. The stock has an overall rating of C, which equates to Neutral in our proprietary rating system.

The stock has a D grade for Stability and Value. We have also graded VJET for Growth, Quality, Momentum and Sentiment. Click here to access all VJET’s ratings.

VJET is ranked #3 in the same industry.

The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

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DDD shares fell $0.17 (-0.47%) in after-hours trading Thursday. Year-to-date, DDD has gained 242.27%, versus a 2.26% rise in the benchmark S&P 500 index during the same period.

About the Author: Sweta Vijayan

Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...

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