by Marc Bastow | December 12, 2012 6:30 am
It’s that time of year when everyone asks me what I want for Christmas.
Easy answer: a printer.
But I don’t want a laser printer model from Hewlett-Packard (NYSE:HPQ). No, I want a 3D printer from 3D Systems (NYSE:DDD). You know, a three-dimensional “content-to-print” job that actually prints out a product like, say, a plastic widget, shoes, you name it.
… OK, so since I don’t have a single artistic gene in my body, maybe I’ll just settle for some 3D stock under my tree instead.
3D Systems’ technology truly is a potential “next great thing,” essentially making products through a combination of CAD/CAM (computer-aided design/computer-aided manufacturing), with software to design products, and three-dimensional printers to produce functional end-use parts.
So how functional is this gee-whiz technology? Well, here’s a list of things 3D Systems currently can produce:
Heck, 3D printing technology even could be used to produce custom-designed beams considered stronger than steel for commercial building applications. Imagine the money saved in the manufacturing process!
According to industry source On 3D Printing, what is today a $1.3 billion industry should turn into a $3.1 billion industry by 2016 and $5.2 billion by 2020.
DDD’s revenues of $230 million in 2011 were more than double those in 2009, and well more than that of competitor Stratasys (NASDAQ:SSYS), which does more than $155 million. Still, both have plenty of market to eat in the coming years.
In addition to organic growth, DDD has hit the acquisition trail heavily since 2009. In 2011 alone, it ate up 11 companies, and this year it has acquired Innovative Modelmakers B.V., INUS Technology, Vidar Systems, Vitzu Technologies and Z Corp, among others.
Wall Street has taken notice. DDD has exploded by more than 700% in the past three years, including a more-than-tripling in its share price year-to-date.
That — and DDD’s subsequent 70 price-to-earnings ratio — begs a fair question: Is this too much too fast?
Well, the growth in earnings seem to back it up. In 2011, DDD watched its printer shipments more than triple 2010’s numbers, and earnings grew 70% to 70 cents per share off that strength. This year, earnings are expected to grow another 75% to $1.22 per share.
Quarterly growth is screaming along at nearly 48% on average for the past 12 quarters, while running net margins of around 15%. Sure, acquisitions will cost 3D Systems a bit on goodwill, running at about $220 million in the past three quarters … so should these companies not pan out, it could cost DDD in a big way (see Autonomy and HPQ).
As for free cash flow, DDD is a bit thin to be sure, with just more than $22 million in the last quarter, but it has $189 million in cash on hand, so the well shouldn’t run dry anytime soon.
So, there you have it: a growing, aggressive tech stock that could change the world as we know it.
Feel free to leave a few shares next to my Red Ryder BB gun, Santa.
Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing, he did not hold a position in any of the aforementioned securities.
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