3D Printers are the Rage!

Three dimentional printers are the rage right now. Known for their use in manufacturing settings — and $1 million price tags —  now 3D printers aroudn going mainstream, with printer prices around $1300. Soon many of us will have these printers in our homes, but I’m trying to think of enough uses for me to drop say $500 on a 3D printer. Maybe a cell phone cover? Plastic cup? Artwork? Right now 3D printers are best for professional designers who want to build something on their computer and see/feel the three dimensional object in real life.

The biggest 3D printer company is 3-D Systems (DDD). 3-D makes money off not only printers, but also the print materials too (i.e. the paper). 3-D Systems main competitor is Stratasys (SSYS). DDD did around $350 million in revenue in 2012, SSYS around $200 million.

One Year Chart

Here’s the one-year view of DD as of 1/3/13. Note the stock went from the teens to almost $60 in a year (DDD is currently on a parabolic move higher and is $70 today). Yes, 3D printing is the rage right now (the industry might be the hottest out there) but there’s a lot of red in this chart for a stock that did so well.

DDD’s P/E of 37 is high compared to the estimated Long Term Growth Rate of 14%. Next quarter’s Estimate of 138% profit growth looks great but the three quarters after that show 28%, 30% and 25% growth coming. DDD sometimes beats, sometimes meets estimates so I can’t assume 40% profit growth is coming after next quarter. Analysts forecast 25% revenue growth in 2013.

Two quarters ago, after DDD had 4% profit growth, analysts lowered 2012 estimates a bit from $1.14 to $1.10 a share. Leading stocks have their annual estimates upped — usually by a lot — so its rare for a stock to shoot higher after such a ho-hum quarter.

Fair Value

I’m taking a conservative stance and saying this company is worth 35 times earnings. The stock is where it should be now. At the current $70, DDD is selling for 44 times earnings.

Sharek’s Take

3D printing is the rage right now and this industry will get a lot of small sales now that the public is able to buy printers. But other than cell phone cases and cute toys, I’m trying to think of a true need for people to have 3D printers in their homes. The run DDD went on last year was tough to forecast since there were two weak quarters out of four. Also, I’m leery of this stock right now as its almost quadrupled in the last year.

DDD is on the radar, but prudent investors might want to wait for a correction before climbing aboard. I think I will wait, DDD is on a parabolic move and parabolic moves often lead to a huge correction. DDD is on my radar.