Why 3D Systems Corporation's Shares Plunged 13% Today

What happened

Shares of 3D printing company 3D Systems Corporation (NYSE: DDD) fell as much as 12.5% in trading Tuesday after reporting fourth-quarter financial results. At 3:15 p.m. EST shares had recovered slightly but were still down 9.9% on the day.

So what

Revenue fell 9.5% from a year ago to $165.9 million and earnings per share came in at $0.05, or $0.15 when one-time items were pulled out. The EPS number surpassed expectations of $0.12 from Wall Street, but analysts were looking for $176.1 million in revenue.

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While results were mixed, guidance didn't leave a good taste in investors' mouths. Management said they expect revenue to grow 2% to 8% in 2017, meaning revenue of $643 million to $684 million, while earnings are expected to be $0.51 to $0.55 per share on an adjusted basis. Both results were at the low end of expectations and likely led to Tuesday's sell-off.

Now what

While revenue figures may not be what investors expected, or hoped for from guidance, the company's cost cutting initiatives are certainly helping operations. Operating costs were down just over $10 million to $78.8 million in the fourth quarter and gross profit was up 230 basis points to 50%.

The 3D printing market is certainly improving with greater adoption and better quality products, but that hasn't translated to revenue growth yet for 3D Systems. What's positive is that management sees growth on the horizon and that margins are starting to expand. If that trend continues long term, investors may be rewarded by sticking with the stock.

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Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends 3D Systems. The Motley Fool has a disclosure policy.