R.R. Donnelley & Sons (NYSE: RRD) and Quad/Graphics (NYSE:QUAD) are both small-cap business services companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, valuation, analyst recommendations, institutional ownership, risk, profitability and earnings.
Institutional & Insider Ownership
85.9% of R.R. Donnelley & Sons shares are held by institutional investors. Comparatively, 49.6% of Quad/Graphics shares are held by institutional investors. 2.3% of R.R. Donnelley & Sons shares are held by insiders. Comparatively, 12.1% of Quad/Graphics shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
R.R. Donnelley & Sons has a beta of 1.98, indicating that its stock price is 98% more volatile than the S&P 500. Comparatively, Quad/Graphics has a beta of 1.48, indicating that its stock price is 48% more volatile than the S&P 500.
This table compares R.R. Donnelley & Sons and Quad/Graphics’ 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%|
R.R. Donnelley & Sons pays an annual dividend of $0.56 per share and has a dividend yield of 6.7%. Quad/Graphics pays an annual dividend of $1.20 per share and has a dividend yield of 5.4%. R.R. Donnelley & Sons pays out -7.9% of its earnings in the form of a dividend. Quad/Graphics pays out 69.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. R.R. Donnelley & Sons is clearly the better dividend stock, given its higher yield and lower payout ratio.
Valuation and Earnings
This table compares R.R. Donnelley & Sons and Quad/Graphics’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|R.R. Donnelley & Sons||$6.90 billion||0.08||-$495.90 million||($7.07)||-1.18|
|Quad/Graphics||$4.33 billion||0.26||$44.90 million||$1.73||12.73|
Quad/Graphics has lower revenue, but higher earnings than R.R. Donnelley & Sons. R.R. Donnelley & Sons is trading at a lower price-to-earnings ratio than Quad/Graphics, indicating that it is currently the more affordable of the two stocks.
This is a summary of current ratings for R.R. Donnelley & Sons and Quad/Graphics, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|R.R. Donnelley & Sons||0||0||0||0||N/A|
Quad/Graphics beats R.R. Donnelley & Sons on 9 of the 14 factors compared between the two stocks.
R.R. Donnelley & Sons Company Profile
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.
Quad/Graphics Company Profile
Quad/Graphics, Inc. is a marketing services provider. The Company’s segments are United States Print and Related Services, International and Corporate. The United States Print and Related Services segment consists of the Company’s United States printing operations. The United States Print and Related Services segment includes retail inserts, publications, catalogs, special interest publications, journals, direct mail, books, directories, in-store marketing and promotion, packaging, newspapers, custom print products, other commercial and specialty printed products, and global paper procurement. The United States Print and Related Services segment also includes marketing and other complementary services, including marketing strategy and data insights. The International segment consists of the Company’s printing operations in Europe and Latin America, including operations in England, France, Germany and Poland, as well as investments in printing operations in Brazil and India.
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