3D Systems (DDD)

Underperform
3D Systems keeps us up at night. Its falling revenue and negative returns on capital suggest it’s destroying value as demand fizzles out. StockStory Analyst Team
Anthony Lee, Lead Equity Analyst
Kayode Omotosho, Equity Analyst

2. Summary

Underperform

Why We Think 3D Systems Will Underperform

Founded by the inventor of stereolithography, 3D Systems (NYSE:DDD) engineers, manufactures, and sells 3D printers and other related products to the aerospace, automotive, healthcare, and consumer goods industries.

  • Annual sales declines of 6.9% for the past five years show its products and services struggled to connect with the market during this cycle
  • Sales were less profitable over the last five years as its earnings per share fell by 79.6% annually, worse than its revenue declines
  • Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
3D Systems doesn’t check our boxes. We’re on the lookout for more interesting opportunities.
StockStory Analyst Team

Why There Are Better Opportunities Than 3D Systems

3D Systems’s stock price of $1.63 implies a valuation ratio of 0.5x forward price-to-sales. The market typically values companies like 3D Systems based on their anticipated profits for the next 12 months, but it expects the business to lose money. We also think the upside isn’t great compared to the potential downside here - there are more exciting stocks to buy.

We’d rather pay a premium for quality. Cheap stocks can look like a great deal at first glance, but they can be value traps. Less earnings power means more reliance on a re-rating to generate good returns; this can be an unlikely scenario for low-quality companies.

3. 3D Systems (DDD) Research Report: Q1 CY2025 Update

3D printing company 3D Systems (NYSE:DDD) missed Wall Street’s revenue expectations in Q1 CY2025, with sales falling 8.1% year on year to $94.54 million. Its non-GAAP loss of $0.21 per share was 44.8% below analysts’ consensus estimates.

3D Systems (DDD) Q1 CY2025 Highlights:

  • Revenue: $94.54 million vs analyst estimates of $98.31 million (8.1% year-on-year decline, 3.8% miss)
  • Adjusted EPS: -$0.21 vs analyst expectations of -$0.15 (44.8% miss)
  • Adjusted EBITDA: -$23.9 million vs analyst estimates of -$12.36 million (-25.3% margin, 93.3% miss)
  • Operating Margin: -38.9%, in line with the same quarter last year
  • Free Cash Flow was -$36.58 million compared to -$28.74 million in the same quarter last year
  • Market Capitalization: $321.2 million

Company Overview

Founded by the inventor of stereolithography, 3D Systems (NYSE:DDD) engineers, manufactures, and sells 3D printers and other related products to the aerospace, automotive, healthcare, and consumer goods industries.

3D Systems was established in 1986 by Chuck Hull, who is credited with inventing stereolithography, a process that enabled the creation of a three-dimensional object from a digital model. This breakthrough led to the development of the first commercial 3D printer.

The company quickly became a leader in the 3D printing industry, contributing significantly to the evolution of rapid prototyping and additive manufacturing technologies. Over the years, 3D Systems has expanded its technology portfolio to include various 3D printing methods, materials, software, and healthcare solutions.

Today, the company's suite of 3D printers is critical in manufacturing sectors including aerospace, automotive, and industrial goods, enabling rapid prototyping, tooling, and direct production of complex parts. These capabilities significantly reduce lead times and costs while improving product performance and customization.

In the healthcare sector, 3D Systems leverages its technology to revolutionize medical practices by producing patient-specific implants, prosthetics, and surgical planning tools. The precision and adaptability of 3D printing meet the needs of medical professionals, improving patient outcomes and surgical efficiencies.

Additionally, the company supports the manufacturing industry and the medical community with software for design and simulation. The company’s software services provide a source of recurring revenue through ongoing updates and licenses. By partnering with companies and institutions, 3D Systems leverages its expertise to co-create solutions.

The company engages in contracts with customers ranging from small businesses to large enterprises, often involving pricing agreements, volume commitments, and ongoing support contracts, which enhance financial stability and predictability.

4. Custom Parts Manufacturing

Onshoring and inventory management–themes that grew in focus after COVID wreaked havoc on global supply chains–are tailwinds for companies that combine economies of scale with reliable service. Many in the space have adopted 3D printing to efficiently address the need for bespoke parts and components, but all companies are still at the whim of economic cycles. For example, consumer spending and interest rates can greatly impact the industrial production that drives demand for these companies’ offerings.

Competitors offering similar products include Stratasys (NASDAQ:SSYS), EOS (private), HP (NYSE:HPQ), and Desktop Metal (NYSE:DM).

5. Sales Growth

A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. 3D Systems struggled to consistently generate demand over the last five years as its sales dropped at a 6.9% annual rate. This was below our standards and suggests it’s a low quality business.

3D Systems Quarterly Revenue

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. 3D Systems’s recent performance shows its demand remained suppressed as its revenue has declined by 9.4% annually over the last two years. 3D Systems Year-On-Year Revenue Growth

3D Systems also breaks out the revenue for its most important segments, Industrial and Healthcare, which are 56.3% and 43.7% of revenue. Over the last two years, 3D Systems’s Industrial revenue (aerospace, defense, and transportation manufacturing) averaged 6.1% year-on-year declines while its Healthcare revenue (dental and medical devices) averaged 12.6% declines.

This quarter, 3D Systems missed Wall Street’s estimates and reported a rather uninspiring 8.1% year-on-year revenue decline, generating $94.54 million of revenue.

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. Although this projection suggests its newer products and services will fuel better top-line performance, it is still below the sector average.

6. Gross Margin & Pricing Power

3D Systems’s unit economics are great compared to the broader industrials sector and signal that it enjoys product differentiation through quality or brand. As you can see below, it averaged an excellent 40% gross margin over the last five years. Said differently, roughly $39.96 was left to spend on selling, marketing, R&D, and general administrative overhead for every $100 in revenue. 3D Systems Trailing 12-Month Gross Margin

This quarter, 3D Systems’s gross profit margin was 34.6%, marking a 5.2 percentage point decrease from 39.8% in the same quarter last year. 3D Systems’s full-year margin has also been trending down over the past 12 months, decreasing by 4.9 percentage points. If this move continues, it could suggest a more competitive environment with some pressure to lower prices and higher input costs (such as raw materials and manufacturing expenses).

7. Operating Margin

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

3D Systems’s high expenses have contributed to an average operating margin of negative 37.4% over the last five years. Unprofitable industrials companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.

Looking at the trend in its profitability, 3D Systems’s operating margin decreased by 45.4 percentage points over the last five years. 3D Systems’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

3D Systems Trailing 12-Month Operating Margin (GAAP)

This quarter, 3D Systems generated a negative 38.9% operating margin. The company's consistent lack of profits raise a flag.

8. Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

3D Systems’s earnings losses deepened over the last five years as its EPS dropped 76.1% annually. We tend to steer our readers away from companies with falling EPS, where diminishing earnings could imply changing secular trends and preferences. If the tide turns unexpectedly, 3D Systems’s low margin of safety could leave its stock price susceptible to large downswings.

3D Systems Trailing 12-Month EPS (Non-GAAP)

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For 3D Systems, its two-year annual EPS declines of 24.7% show it’s still underperforming. These results were bad no matter how you slice the data.

In Q1, 3D Systems reported EPS at negative $0.21, down from negative $0.17 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street is optimistic. Analysts forecast 3D Systems’s full-year EPS of negative $0.42 will reach break even.

9. Cash Is King

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

3D Systems’s demanding reinvestments have drained its resources over the last five years, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 11.3%, meaning it lit $11.32 of cash on fire for every $100 in revenue.

Taking a step back, we can see that 3D Systems’s margin dropped by 15.5 percentage points during that time. It may have ticked higher more recently, but shareholders are likely hoping for its margin to at least revert to its historical level. Almost any movement in the wrong direction is undesirable because it’s already burning cash. If the longer-term trend returns, it could signal it’s in the middle of a big investment cycle.

3D Systems Trailing 12-Month Free Cash Flow Margin

3D Systems burned through $36.58 million of cash in Q1, equivalent to a negative 38.7% margin. The company’s cash burn was similar to its $28.74 million of lost cash in the same quarter last year.

10. Return on Invested Capital (ROIC)

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

3D Systems’s five-year average ROIC was negative 43%, meaning management lost money while trying to expand the business. Its returns were among the worst in the industrials sector.

3D Systems Trailing 12-Month Return On Invested Capital

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, 3D Systems’s ROIC has unfortunately decreased significantly. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.

11. Balance Sheet Risk

As long-term investors, the risk we care about most is the permanent loss of capital, which can happen when a company goes bankrupt or raises money from a disadvantaged position. This is separate from short-term stock price volatility, something we are much less bothered by.

3D Systems burned through $68.85 million of cash over the last year, and its $275.6 million of debt exceeds the $135 million of cash on its balance sheet. This is a deal breaker for us because indebted loss-making companies spell trouble.

3D Systems Net Debt Position

Unless the 3D Systems’s fundamentals change quickly, it might find itself in a position where it must raise capital from investors to continue operating. Whether that would be favorable is unclear because dilution is a headwind for shareholder returns.

We remain cautious of 3D Systems until it generates consistent free cash flow or any of its announced financing plans materialize on its balance sheet.

12. Key Takeaways from 3D Systems’s Q1 Results

We struggled to find many positives in these results as its revenue, EPS, and EBITDA missed Wall Street’s estimates significantly. Overall, this was a weaker quarter. The stock traded down 22.9% to $1.99 immediately after reporting.

13. Is Now The Time To Buy 3D Systems?

Updated: July 7, 2025 at 11:08 PM EDT

A common mistake we notice when investors are deciding whether to buy a stock or not is that they simply look at the latest earnings results. Business quality and valuation matter more, so we urge you to understand these dynamics as well.

3D Systems falls short of our quality standards. For starters, its revenue has declined over the last five years, and analysts don’t see anything changing over the next 12 months. And while its projected EPS for the next year implies the company’s fundamentals will improve, the downside is its diminishing returns show management's prior bets haven't worked out. On top of that, its relatively low ROIC suggests management has struggled to find compelling investment opportunities.

3D Systems’s forward price-to-sales ratio is 0.5x. The market typically values companies like 3D Systems based on their anticipated profits for the next 12 months, but it expects the business to lose money. We also think the upside isn’t great compared to the potential downside here - there are more exciting stocks to buy.

Wall Street analysts have a consensus one-year price target of $3 on the company (compared to the current share price of $1.63).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.