Head to Head Contrast: ARC Document Solutions (ARC) versus R.R. Donnelley & Sons (RRD)

R.R. Donnelley & Sons (NYSE: RRD) and ARC Document Solutions (NYSE:ARC) are both small-cap industrials companies, but which is the better investment? We will compare the two businesses based on the strength of their analyst recommendations, risk, dividends, profitability, earnings, institutional ownership and valuation.

Volatility & Risk

R.R. Donnelley & Sons has a beta of 2.13, suggesting that its stock price is 113% more volatile than the S&P 500. Comparatively, ARC Document Solutions has a beta of 2.29, suggesting that its stock price is 129% more volatile than the S&P 500.

Earnings & Valuation

This table compares R.R. Donnelley & Sons and ARC Document Solutions’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
R.R. Donnelley & Sons $6.90 billion 0.10 -$495.90 million ($6.72) -1.43
ARC Document Solutions $406.32 million 0.29 -$47.86 million ($0.15) -17.13

ARC Document Solutions has lower revenue, but higher earnings than R.R. Donnelley & Sons. ARC Document Solutions is trading at a lower price-to-earnings ratio than R.R. Donnelley & Sons, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares R.R. Donnelley & Sons and ARC Document Solutions’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
R.R. Donnelley & Sons -7.15% -42.52% 1.57%
ARC Document Solutions -1.70% 5.35% 2.27%

Analyst Recommendations

This is a summary of recent ratings for R.R. Donnelley & Sons and ARC Document Solutions, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
R.R. Donnelley & Sons 0 0 0 0 N/A
ARC Document Solutions 0 2 0 1 2.67

ARC Document Solutions has a consensus target price of $4.63, suggesting a potential upside of 79.96%. Given ARC Document Solutions’ higher probable upside, analysts clearly believe ARC Document Solutions is more favorable than R.R. Donnelley & Sons.

Institutional and Insider Ownership

85.6% of R.R. Donnelley & Sons shares are owned by institutional investors. Comparatively, 70.5% of ARC Document Solutions shares are owned by institutional investors. 2.3% of R.R. Donnelley & Sons shares are owned by company insiders. Comparatively, 14.9% of ARC Document Solutions shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

R.R. Donnelley & Sons pays an annual dividend of $0.56 per share and has a dividend yield of 5.8%. ARC Document Solutions does not pay a dividend. R.R. Donnelley & Sons pays out -8.3% of its earnings in the form of a dividend.

Summary

ARC Document Solutions beats R.R. Donnelley & Sons on 10 of the 15 factors compared between the two stocks.

About R.R. Donnelley & Sons

R.R. Donnelley & Sons Company helps organizations communicate by working to create, manage, produce, distribute and process content on behalf of its customers. The Company’s segments include Variable Print, Strategic Services, International and Corporate. The Variable Print segment includes the Company’s United States short-run and transactional printing operations. The Variable Print segment’s primary product offerings include commercial and digital print, direct mail, labels, statement printing, forms and packaging. The Strategic Services segment includes the Company’s logistics services, print management offerings and digital and creative solutions. The International segment includes the Company’s non-United States printing operations in Asia, Latin America and Canada. The International segment’s primary product and service offerings include magazines, catalogs, retail inserts, books, directories, direct mail, logistics services and digital and creative solutions.

About ARC Document Solutions

ARC Document Solutions, Inc. (ARC) is a document solutions provider for the architectural, engineering and construction (AEC) industry. The Company also provides document solutions to businesses of various types. ARC’s offerings include managed print services (MPS), offsite services, archive and information management (AIM), specialized color printing, Web-based document management applications, digital shipping/managed file transfer, and equipment and supplies sales. MPS is an onsite service where it installs a complete document solution platform in its customers’ offices and project sites. Its Offsite Services offering operates over 180 offsite service centers. AIM enables its customers to store information and intellectual property in a cloud-based and searchable digital archive. The Specialized Color Printing offering is focused on color printing, finishing and assembly of graphic materials. Its Web-Based Document Management Applications develop and offer tools to its customers.

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