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Why Is Cimpress (CMPR) Down 2.3% Since Last Earnings Report?

It has been about a month since the last earnings report for Cimpress (CMPR). Shares have lost about 2.3% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Cimpress due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Cimpress' Q2 Earnings Beat Estimates, Revenues Miss

Cimpress reported mixed second-quarter fiscal 2020 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues lagged the same.

The company’s adjusted earnings came in at $2.73 per share, surpassing the Zacks Consensus Estimate of $2.25. Moreover, the bottom grew 25.8% from the year-ago quarter figure of $2.17.

Quarter Details

Total revenues in the fiscal second quarter were $820.3 million compared with $825.6 million a year ago. Also, the top line missed the consensus estimate of $841 million.

National Pen segment generated revenues of about $128 million, down 3.8% year over year. Vistaprint — the largest revenue generating segment of the company — reported aggregate revenues of $433.3 million, down from $443.9 million.

Upload and Print segment’s revenues increased to $214.1 million from $203.8 million in the year-ago quarter. The segment consists of two subgroups — PrintBrothers and The Print Group. PrintBrothers’ revenues increased to $126.6 million from $116.3 million, whereas The Print Group generated $87.7 million, roughly flat year over year. Moreover, revenues from All Other Businesses increased to $49.8 million from $48.3 million.

Margin Details

In the quarter, Cimpress' cost of revenues was $394 million, down 4.3% on a year-over-year basis. It represented 48% of total revenues. Total selling, general & administrative expenses declined 10.2% to $225.2 million. It represented 27.5% of revenues in the fiscal second quarter.

Gross profit increased 2.9% year over year to $426.3 million, with margin expanding 180 basis points to 52%. Net interest expenses fell 6.5% to $15.7 million.

Balance Sheet and Cash Flow

As of Dec 31, 2019, Cimpress had $36.9 million in cash and cash equivalents compared with $48.3 million in the prior-year quarter. Also, the company’s total debt (net of issuance costs), was $1,370.3 million, up from $1,048.4 million.

In the fiscal second quarter, Cimpress repurchased 2,279,736 shares for $305.3 million. Net cash provided by operating activities was $202.2 million, higher than $183.3 million in the year-ago quarter.

Outlook

For fiscal 2020, the company estimates National Pen’s sales growth to be in the range of flat-to-low single-digit (at constant currency), while the same for Vistaprint is projected to be in the range of flat-to-negative.

 

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 55.07% due to these changes.

VGM Scores

Currently, Cimpress has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Cimpress has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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