Head-To-Head Comparison: RR Donnelley & Sons (RRD) and ARC Document Solutions (ARC)

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

Profitability

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

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

Analyst Recommendations

This is a breakdown of current ratings and price targets for ARC Document Solutions and RR Donnelley & Sons, as provided by MarketBeat.com.

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

ARC Document Solutions currently has a consensus price target of $4.63, suggesting a potential upside of 94.33%. Given ARC Document Solutions’ higher probable upside, equities analysts clearly believe ARC Document Solutions is more favorable than RR Donnelley & Sons.

Dividends

RR Donnelley & Sons pays an annual dividend of $0.56 per share and has a dividend yield of 7.4%. ARC Document Solutions does not pay a dividend. RR Donnelley & Sons pays out -7.9% of its earnings in the form of a dividend.

Risk & Volatility

ARC Document Solutions has a beta of 2.28, suggesting that its stock price is 128% more volatile than the S&P 500. Comparatively, RR Donnelley & Sons has a beta of 1.79, suggesting that its stock price is 79% more volatile than the S&P 500.

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
ARC Document Solutions $406.32 million 0.27 -$47.86 million ($0.14) -17.00
RR Donnelley & Sons $6.90 billion 0.08 -$495.90 million ($7.07) -1.07

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

Insider and Institutional Ownership

70.7% of ARC Document Solutions shares are owned by institutional investors. Comparatively, 86.0% of RR Donnelley & Sons shares are owned by institutional investors. 14.9% of ARC Document Solutions shares are owned by insiders. Comparatively, 2.3% of RR Donnelley & Sons shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

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

ARC Document Solutions Company Profile

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.

RR 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.

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