This document contains an investor report analyzing 3D printing companies 3D Systems and The ExOne Company. It provides financial information on both companies, including quarterly results, revenue forecasts, and reasons for missing earnings targets. It also includes two students' analyses of the companies, using the residual income model and discounted cash flow models to calculate intrinsic value and make investment recommendations. Both students recommend not investing currently as share prices appear overinflated compared to intrinsic value.

1. An Investor’s Report
3D SYSTEMS THE EXONE COMPANY

2. ABOORVA SUNDAR
DEGREE: Business/Law –majoring in Finance
CAREER ASPRIATIONS: Family Law Barrister

3. Holding company founded in 1986 by Chuck Hull
Market leader
Growing customer base
Incorporate stereolithography, selective laser sintering, colour-jet printing, fused deposition modelling, multi-jet printing and direct metal sintering technologies in its processes.
3D SYSTEMS (DDD)

4. Founded in 2005
Provides printing machines, printed products, material and other services to industrial customers on a global scale.
They also supply associated materials, including consumables, replacement parts, and technical support that is necessary for their consumers.
XONE’s ability to print products from a variety of desirable materials is one of their key competitive advantages.
THE EXONE COMPANY (XONE)

5. Third quarter results are below expectations
Company shares fell by 16.6 percent
Revenue forcast fell from $700-740million to $650- 690million
Missed Wall Street earnings targets for the last 6 consecutive quarters
These figures have been blamed on 3D Systems decision to invest heavily on increasing the capacity of a metal printer maker Phoneix Systems which it acquired in July 2013.
3D Systems inability to reach sales goals and the delayed availability of some of its consumer products are also attributable reasons for the fall in their results.
3D SYSTEMS (DDD)

6. Their reported revenue of $11.20million for the quarter is well below the analysts’ consensus estimate of $12.11million.
Reported $0.32 earnings per share for the quarter is $0.18 below analysts estimates.
However their stocks saw unusually large options trading activity, with investors purchasing 2,084 put options on the company which is an approximately 250% increase compared to the average volume of 596 put options.
THE EXONE COMPANY (XONE)

7. HAMEEDA ANWAR
DEGREE: Business/Law –majoring in Finance
CAREER ASPIRATIONS: Banking Law

8. RESIDUAL INCOME MODEL
Calculations based on forecasting EPS and ROE – derived in the Balance Sheet and Profit & Loss statement
Less potential errors compared to FCF model
This model can be better estimate the value of the firm when the industry is unpredictable
MODEL: EARNINGS BASED MODEL

9. Market forecasts EPS for the first 3 years based on the highest EPS given by the NASDAQ- closest to near future values/more reliable than our figures
Beyond this;
12% in EPS based on ExOnes future historical trends
3% growth in EPS for 3D systems
APPLICATION

10. 2014-2020
2020 seems to set a reasonable projected horizon, based on the industry’s expected growth (set at 2018- 2121)
4D printing on the horizon?
HORIZON FORECAST

11. EXONE
-1.8
-1.6
-1.4
-1.2
-1
-0.8
-0.6
-0.4
-0.2
0
0.2
0.4
2013
2014
2015
2016
2017
2018
2019
2020
PV of Residual Income
PV of Residual Income (Residual
Income * Discount Factor )

12. EPS as per the NASDAQ for 2013- 2016
EPS growth at 12% thereafter
Constant BETA of 0.71 (NASDAQ)
Constant Re: 0.05763 (assumed no growth)- difficult to assert in the volatile technological/ electronics market
ASSUMPTIONS

13. TOTAL VALUE:
MARKET VALUE:
RECOMMENDATION: not to buy – seemingly overinflated price in the market IN THE CURRENT PERIOD
EXONE VALUATION

14. ExOne
Vo
Growth 0% B=0.71
12.20038
B= 1.02 ( Avg tech/electronics industry)
7.079217
Growth 3% B= 0.71
16.57677
B= 0.5
17.78179
SENSITIVITY ANALYSIS

15. 3DSYSTEMS
-1.5
-1
-0.5
0
0.5
1
2013
2014
2015
2016
2017
2018
2019
2020
PV of Residual Income
PV of Residual Income (Residual Income *
Discount Factor )

16. EPS as per the NASDAQ for 2013- 2016
EPS growth at 3% thereafter
Constant BETA of 1.4 (NASDAQ)
Constant Re: 0.09213 (assume no growth)- difficult to assert in the volatile technological/ electronics market
ASSUMPTIONS

17. 3DSYSTEMS VALUATION
TOTAL VALUE:
MARKET VALUE:
RECOMMENDATION: not to buy – seemingly overinflated price in the market IN THE CURRENT PERIOD

18. 3D systems
Vo
Growth 0% B=1.4
19.67411
B=1.02 (avg tech industry )
23.34406
Growth 3% B=1.4
24.63899
B=0.5
31.21335
B=2.00 growth 5%
20.89057
SENSITIVITY ANALYSIS

19. NAFIZ CHOWDHURY
DEGREE: Business/Law –majoring in Finance CAREER ASPIRATIONS: Banking

20. Total corporate value less debt,
the future free cash flow that investors expect the company to generate over a defined timeframe
discounted by the cost of capital appropriate for the business
FCF OVERVIEW

21. ExOne 2014 FCF for common equity: 8017.9
3D Systems 2014 FCF for common equity: 22518.84
XONE:
Market: 21.21
-5%: 5.43
0%: 10.17
+3%: 21.94
DDD:
Market: 37.08
-5%: 17.65
0%: 31.42
+3%: 64.77
FCF: MARKET VS ESTIMATES

22. 3 Scenarios
+3% growth
0% stagnation
-5% recession
Long term vs. short term
2014-2020
Intrinsic value vs. Investor behaviour
FCF KEY CONCEPTS

23. Do not invest
Speculative nature of growth in both methods recommend holding out for the long term
Until DCF indicates the intrinsic share price for both firms
RECOMMENDATION