Here's Why You Should Sell Cimpress (CMPR) Stock Right Now
Based in Venlo, Netherlands, Cimpress N.V. CMPR employs 10,000 people globally across manufacturing, marketing, technology, software development, sales and support functions. It has offices and manufacturing facilities across Europe, North and South America, India, Australia, Philippines, China and Japan.
Cimpress currently carries a Zacks Rank #5 (Strong Sell). Let’s have a look at the factors which are affecting stock.
Cimpress reported lackluster third-quarter fiscal 2017 results with a wider GAAP loss. Both revenues and loss for the quarter missed the respective Zacks Consensus Estimate. Margin pressure remains a significant headwind for the company as gross margin contracted to 51.2% from 54.9% in the year-ago period. Higher operating costs pose another challenge, while restructuring charges further lowered profitability.
The company has underperformed the Zacks categorized Commercial Printing industry with an average return of 0.22% compared with 1.11% gain for the latter, over the last 30 days. Over the same period, the consensus estimate for the current quarter slumped from 29 cents to 7 cents today. Despite enjoying a leading position in the industry, Cimpress faces significant competition from traditional graphic design and printing companies and other online suppliers. Moreover, increasingly advanced desktop publishing software and more capable desktop printers offer small businesses another cost-effective solution for their marketing needs. While these sources cannot meet the breadth of product offerings provided by Cimpress, they can handle the day-to-day marketing needs of small business customers. This could harm the top-line growth of the company.
Headwinds in currency translation could add to the woes as Cimpress generates almost half of its revenues outside the U.S. The strategic repositioning of the Cimpress brand also entails a huge risk. Presently, when the economy of Europe is highly unpredictable post the Brexit referendum, it becomes difficult for the company to increase revenues and reduce costs. In addition, Cimpress is likely to be stifled by the renegotiated deals and restrictions imposed on trade with other European Union members. Brexit could further result in higher tariff and non-tariff barriers to trade between the U.K. and the European Union, lowering productivity of the company. All these are likely to undermine its growth potential to some extent.
On a P/S basis, Cimpress looks relatively overvalued compared with the industry. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Right now, Cimpress has a P/S ratio of about 1.28. This is relatively higher than the industry average of 0.44.
Stocks to Consider
Some better-ranked stocks in the industry include Hitachi, Ltd. HTHIY, Publicis Groupe S.A. PUBGY and InnerWorkings, Inc. INWK. Publicis Groupe and InnerWorkings carry a Zacks Rank #2 (Buy), while Hitachi sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Hitachi is currently trading at a forward P/E of 10.9x. It has a long-term earnings growth expectation of 13%.
Publicis Groupe has a long-term earnings growth expectation of 9.51%. It is currently trading at a forward P/E of 14.6x.
InnerWorkings has a long-term earnings growth expectation of 21.7%. It is currently trading at a forward P/E of 23.6x.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
InnerWorkings, Inc. (INWK): Free Stock Analysis Report
Publicis Groupe SA (PUBGY): Free Stock Analysis Report
Hitachi Ltd. (HTHIY): Free Stock Analysis Report
Cimpress N.V (CMPR): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
