Last year 3D systems made near 40m in net profit. Lets say the company makes a 60m net profit for this year. That is being fairly generous. This company is valued at 4.43B. That is a return on equity of 1.35%(@60m) .
Who is going to want to buy at these prices for that return? Who would buy to get a 1.35% return on equity. Its not like there is hidden value in the balance sheet.
Don't expect the companies margins to stay this high. So that means lower net profit over the coming years. This industry is getting more competitive as time goes by, as there are no barriers to entry and margins are high. That means more people are starting competition business to get some of the money.
However, assume that is wrong and they make even more money, Lets say the stock price stays the same and they make 100m next year in net profit, the return is 2.25%. The 10y returns more then that.
Crazy Prices. Insiders have not bought stock since last year, but have only sold this year. And I mean they sold. And they even sold more in the recent stock offering. Insider ownership as of last proxy statement was at 10.8%. That is not a good amount for such a little company with such a "great future", from what I always read by the propaganda articles online. Shows you how much management believes in their own company
More competition as the time goes by, as if there was not enough right now. No moat. There patents are worthless. Just read their last 10k from 2012.
My price target is around a 0.75-1.25B valuation for this stock or around 8-14 a share. I believe this is a fair price for the next two years.
Disclosure: I am short DDD.