3D Systems Earnings on Halloween Day: 3 Things to Watch

3D Systems (NYSE: DDD) is slated to report its third-quarter 2017 earnings after the market closes on Tuesday, Oct. 31 -- yes, Halloween Day. It's scheduled to be the first of the two largest publicly traded pure-play 3D printing companies to report, with Stratasys on deck for Nov. 14.

Shares of 3D Systems are down 12.3% in 2017, through Oct. 17. Meanwhile, Stratasys stock has gained 28.2% so far this year, while the S&P 500 has returned 16.2%.

Benchmark quarterly numbers

Here are the year-ago quarterly results to use as benchmarks to gauge 3D Systems' earnings.

To provide some context -- though investors shouldn't place too much importance on Wall Street's near-term estimates -- analysts expect 3D Systems to deliver adjusted EPS of $0.12 on revenue of $162.95 million, representing a decline of 14.3% and an increase of 4.2%, respectively, over the year-ago quarter.

For additional perspective, in the second quarter, 3D Systems' revenue inched up about 1% and its adjusted EPS dropped 33% from the year-ago period. And in the first quarter, revenue and adjusted EPS tumbled 2.5% and 20%, respectively.

Along with the headline numbers, here's what to focus on in the report.

1. 3D printer sales

Investors should remain focused on 3D printer sales, which have been a weak spot in recent years. While 3D Systems has a service business, sales of 3D printers are particularly critical to the company's long-term success. That's because it employs a razor-and-blade-like business model, where sales of 3D printers drive sales of high-margin print materials, or "consumables," over the life of the printers.

In the first and second quarters, year-over-year revenue from sales of 3D printers declined 4% and 14%, respectively. In 2016, this number was down 21% from 2015.

2. Figure 4 sales and outlook

CEO Vyomesh Joshi reiterated on last quarter's conference call what the company said in March when it shipped its first Figure 4 system -- that shipments of its Figure 4 3D printing systems should ramp up in the second half of this year. Well, the second half of the year is here, so investors should expect some news on this front on the conference call.

Figure 4 is the speedy, robotic, modular stereolithography (SLA) 3D printing system designed for the production of polymer parts that 3D Systems launched earlier this year. The company claims that it's up to 50 times faster than conventional SLA 3D printing systems, and that the tech opens up a vast array of materials possibilities. A lot depends on the success of this offering, as the company views Figure 4 as one of its long-term growth drivers. Moreover, last year, HP Inc. and start-up Carbon both entered the enterprise 3D printing market when they released 3D printers touted to be faster than those currently on the market.

3. Healthcare business

3D Systems' healthcare business has generally been one of the better-performing parts of its business over the last few years, so obviously investors would like to see this continue. In 2016, healthcare revenue grew 5% from 2015 -- not strong growth by any means, but considerably better than the overall business performed. (Total revenue decreased 9.5%, driven by double-digit declines in 3D printer and service revenue.)

Unfortunately, however, investors won't be able to get a clear view of how the healthcare business is performing this year from the breakout of the healthcare revenue. That's because 3D Systems made an acquisition -- Vertex Global, which has a portfolio of dental materials -- in the first quarter of the year that falls into the healthcare category, and the company didn't provide exact sales figures for this entity. So investors will have to rely on whatever color about the healthcare business' performance that management provides on the conference call.

10 stocks we like better than 3D SystemsWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and 3D Systems wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of October 9, 2017

Beth McKenna has no position in any of the stocks mentioned. The Motley Fool recommends 3D Systems and Stratasys. The Motley Fool has a disclosure policy.