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Cimpress (CMPR) to Gain From Acquisitions Despite Headwinds

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On Jun 22, we issued an updated research report on Cimpress plc CMPR.

In the past three months, this Zacks Rank #3 (Hold) stock has gained 65.4% compared with the industry’s growth of 44.2%.

 



 

Existing Business Scenario

Cimpress is well-positioned to benefit from strength across its product portfolio. The company expanded its product line to include a wide variety of offerings for meeting customers' marketing needs. This augurs well for its long-term growth. Also, during the first quarter of fiscal 2020, the company integrated several adjacency businesses (including Vistaprint Corporate Solutions, Vistaprint India and Vistaprint Japan) into the Vistaprint segment. This has been allowing the businesses to better leverage the Vistaprint brand, customers, technology and other assets.

Also, Cimpress’ acquisition of BuildASign (completed in October 2018) has strengthened its home décor business over time. Notably, in third-quarter fiscal 2020 (ended March 2020), the buyout bolstered the top-line performance of the company’s All Other segment. Moreover, it remains committed toward increasing shareholders’ wealth through share repurchase programs. In this regard, the company repurchased shares worth $89.5 million in the fiscal third quarter. However, it is worth mentioning here that repurchase activities have been temporarily halted due to the coronavirus outbreak.

However, the pandemic has been impacting Cimpress’ operations. For instance, the company’s organic revenues in the fiscal third quarter decreased 9% year over year. The decline was primarily attributable to the lower demand for its products across its small and medium-scale businesses. Also, the company’s consolidated bookings for April and May decreased 51% and 25% on a year-over-year basis, respectively.

Moreover, a highly leveraged balance sheet remains concerning for the company. Notably, its long-term debt at the end of the fiscal third quarter was $1,647.2 million, reflecting a 27% increase over the previous quarter. Its total debt-to-total capital stood at 128.6% at the end of the fiscal third quarter versus 113.9% in the previous quarter.

Stocks to Consider

Some better-ranked stocks from the Zacks Consumer Discretionary sector are Activision Blizzard, Inc. ATVI, TEGNA Inc. TGNA and RCI Hospitality Holdings, Inc. RICK. While Activision Blizzard and TEGNA currently sport a Zacks Rank #1 (Strong Buy), RCI Hospitality carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Activision Blizzard delivered a positive earnings surprise of 31.34%, on average, in the trailing four quarters.

TEGNA delivered a positive earnings surprise of 4.67%, on average, in the trailing four quarters.

RCI Hospitality delivered a positive earnings surprise of 293.40%, on average, in the trailing four quarters.

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Activision Blizzard, Inc (ATVI) : Free Stock Analysis Report
 
Cimpress plc (CMPR) : Free Stock Analysis Report
 
RCI Hospitality Holdings, Inc. (RICK) : Free Stock Analysis Report
 
TEGNA Inc. (TGNA) : Free Stock Analysis Report
 
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