RRD
R.R. Donnelley & Sons Co.
Industrial/Transportation
04/22/2021
Presented
| Date | 04/14/2021 |
| Price | $4.52 |
| Market Cap | $0.32B |
| Ent Value | $1.56B |
| P/E Ratio | N/A |
| Book Value | N/A |
| Div Yield | 0% |
| Shares O/S | 71.41M |
| Ave Daily Vol | 1,822,701 |
| Short Int | 4.09% |
Current
| Price | $10.84 |
| Market Cap | $0.77B |
| R.R. Donnelley & Sons Co. engages in the provision of multichannel communication solutions. It operates through the following segments: Commercial Print, Logistics, Statement Printing, Labels, Packaging, Supply Chain Management, Forms and Business Process Outsourcing. The Commercial Print segment provides various commercial printing products and offer a full range of branded materials including manuals, publications, brochures, business cards, flyers, post cards, posters and promotional items. The Packaging segment provide packaging solutions, ranging from rigid boxes to in-box print materials, for clients in consumer electronics, life sciences, cosmetics and consumer packaged goods industries. The Statement Printing creates critical business communications, including customer billings, financial statements, healthcare communications and insurance documents. The Labels segment produces custom labels for clients across multiple industries including warehouse and distribution, retail, pharmaceutical, manufacturing and consumer packaging. The Supply Chain Management segment provides workflow design to assembly, configuration, kitting and fulfillment for clients in consumer electronics, telecommunications, life sciences, cosmetics, education and industrial industries. The Forms segment produces a variety of forms including invoices, order forms and business forms that support both the private and public sectors for clients in financial, government, retail, healthcare and business services industries and The Business Process Outsourcing segment provides outsourcing services including creative services, research and analytics, financial management and other services for legal providers, insurance, telecommunications, utilities, retail and financial services companies. The company was founded by Richard Robert Donnelley in 1864 and is headquartered in Chicago, IL. |
Publicly traded companies mentioned herein: Apple Inc (AAPL), RR Donnelley & Sons Co (RRD)
Highlights
The presenter is long shares of RR Donnelley & Sons Co (RRD), a ~$300MM commercial printing and marketing company, which he believes has positively transformed its portfolio and can reaccelerate revenue growth coming out of COVID. RRD managed to grow earnings & operating cash flow despite COVID headwinds and the cyclicality of the business, and he thinks RRD can improve revenue growth throughout 2021. RRD currently trades at ~$4.50/share or ~4x EBITDA. If RRD is able to improve revenue growth, he sees shares appreciating from the current price to $12.00/share or ~5x his 2021 EBITDA estimate of $400MM within 12 months. In his blue sky scenario, he forecasts shares appreciating up to $27 or 7x EBITDA. For additional perspective, RRD shares are trading at a 20% trailing FCF yield and 30% forward FCF yield. He notes that these valuations are representative of a company that’s going out of business especially in the current environment, however, he believes that’s not the case for RRD and it’s generally misunderstood, with coverage by one equity analyst and one debt analyst.
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