Why Is Cimpress (CMPR) Down 6.8% Since Last Earnings Report?
It has been about a month since the last earnings report for Cimpress (CMPR). Shares have lost about 6.8% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important drivers.
Cimpress Q3 Earnings & Revenues Beat Estimates
Cimpress reported impressive third-quarter fiscal 2023 results, wherein earnings beat the Zacks Consensus Estimate by 17.1% and sales beat the same by 5.7%.
CMPR incurred an adjusted loss of 97 cents per share, narrower than the Zacks Consensus Estimate of a loss of $1.17 per share. Cimpress incurred a loss of $2.75 per share in the year-ago quarter.
Top-Line Details
Total revenues in the fiscal third quarter were $742.1 million, reflecting an increase of 12.9% from $657.4 million in the year-ago quarter. The organic constant-currency revenue growth was 16%, driven by growth across all businesses. The top line beat the consensus estimate of $702 million.
Segmental Information
The National Pen segment generated revenues of $81.1 million, up from $72.2 million in the prior-year quarter. This compared unfavorably with the Zacks Consensus Estimate of $145 million. Our estimate for the quarter was $81.1 million. Vistaprint — the largest revenue-generating segment — reported aggregate revenues of $396.6 million, up from $349.2 million in the year-ago quarter. This compared unfavorably with the Zacks Consensus Estimate of $372 million. Our estimate for the quarter was $356.9 million.
The Upload and Print segment’s revenues increased to $225.1 million from $195.4 million in the year-ago quarter. The segment consists of two subgroups, namely PrintBrothers and The Print Group. PrintBrothers’ revenues increased to $139.6 million from $120 million in the fiscal third quarter. The Print Group generated revenues of $85.5 million, up from $75.4 million in the fiscal third quarter. Revenues from All Other Businesses increased to $49 million from $48.5 million in the quarter. This compared well with the Zacks Consensus Estimate of $49 million. Our estimate for the quarter was $49.7 million.
Margin Details
In the quarter, Cimpress' cost of revenues was $394.9 million, up 13.6% on a year-over-year basis. The metric represented 53.2% of total revenues. Total selling, general & administrative expenses were $52.6 million, up from $50.9 million reported in the year-ago quarter. The same represented 7.1% of total revenues in the quarter.
Gross profit increased 8.5% year over year to $347 million. The margin was 46.8%, up 70 basis points due to higher volumes and the reduced net impact of cost inflation. Net interest expenses rose 26% to $30.5 million.
Balance Sheet and Cash Flow
As of Mar 31, 2023, Cimpress had $115 million of cash and cash equivalents, compared with $277.1 million at the end of the fourth quarter of fiscal 2022. Also, CMPR’s total debt (net of issuance costs) was $1,693.3 million. In the fiscal third quarter, Cimpress refrained from buying back shares.
In the first nine months of fiscal 2023, net cash provided by operating activities was $68.5 million, compared with $131.7 million cash provided a year ago.
Outlook
Cimpress anticipates operating income of $33-$37 million and adjusted EBITDA of $90-$94 million for the fiscal fourth quarter of 2023. For fiscal 2023, the company expects operating income of $33-$37 million and adjusted EBITDA of $36-$40 million.
For fiscal 2024, the operating income is anticipated to be at least $195 million and the adjusted EBITDA is expected to be at least $400 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 175% due to these changes.
VGM Scores
At this time, Cimpress has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. 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 C. 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. Notably, Cimpress has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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