InnerWorkings (NASDAQ: INWK) and RR Donnelley & Sons Co (NASDAQ:RRD) are both small-cap industrials companies, but which is the superior business? We will compare the two companies based on the strength of their risk, profitabiliy, dividends, institutional ownership, valuation, earnings and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for InnerWorkings and RR Donnelley & Sons Co, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
InnerWorkings 0 0 2 0 3.00
RR Donnelley & Sons Co 0 0 0 0 N/A

InnerWorkings presently has a consensus target price of $14.00, indicating a potential upside of 22.38%. Given InnerWorkings’ higher possible upside, equities analysts clearly believe InnerWorkings is more favorable than RR Donnelley & Sons Co.

Profitability

This table compares InnerWorkings and RR Donnelley & Sons Co’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
InnerWorkings 2.04% 8.19% 3.68%
RR Donnelley & Sons Co -2.97% N/A -4.88%

Insider & Institutional Ownership

80.6% of InnerWorkings shares are held by institutional investors. 5.3% of InnerWorkings shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares InnerWorkings and RR Donnelley & Sons Co’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
InnerWorkings $1.09 billion 0.56 $44.78 million $0.23 49.74
RR Donnelley & Sons Co $6.94 billion 0.10 $479.40 million $0.53 17.81

RR Donnelley & Sons Co has higher revenue and earnings than InnerWorkings. RR Donnelley & Sons Co is trading at a lower price-to-earnings ratio than InnerWorkings, indicating that it is currently the more affordable of the two stocks.

Dividends

RR Donnelley & Sons Co pays an annual dividend of $1.04 per share and has a dividend yield of 11.0%. InnerWorkings does not pay a dividend. RR Donnelley & Sons Co pays out 196.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Risk and Volatility

InnerWorkings has a beta of 1.59, meaning that its share price is 59% more volatile than the S&P 500. Comparatively, RR Donnelley & Sons Co has a beta of 1.74, meaning that its share price is 74% more volatile than the S&P 500.

Summary

InnerWorkings beats RR Donnelley & Sons Co on 9 of the 14 factors compared between the two stocks.

About InnerWorkings

InnerWorkings, Inc. is a marketing execution company. The Company’s software applications and databases create an integrated solution that stores, analyzes and tracks the production capabilities of its supplier network, as well as detailed pricing data. The Company’s segments include North America and International. The North America segment includes operations in the United States and Canada. The International segment includes operations in Mexico, South America, Central America, Europe, the Middle East, Africa and Asia. The Company procures products for clients across a range of industries, such as retail, financial services, hospitality, consumer packaged goods, non-profits, healthcare, pharmaceuticals, food and beverage, broadcasting and cable and transportation. The Company’s clients are classified into over two categories, enterprise and transactional. The Company provides marketing materials to its transactional clients on an order-by-order basis.

About RR Donnelley & Sons Co

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.

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