R.R. Donnelley & Sons (NYSE: RRD) and Deluxe (NYSE:DLX) are both business services companies, but which is the better business? We will compare the two companies based on the strength of their valuation, institutional ownership, analyst recommendations, dividends, earnings, profitability and risk.
Earnings & Valuation
This table compares R.R. Donnelley & Sons and Deluxe’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|R.R. Donnelley & Sons||$6.90 billion||0.10||-$495.90 million||($7.07)||-1.36|
|Deluxe||$1.85 billion||2.02||$229.38 million||$4.08||19.04|
Deluxe has lower revenue, but higher earnings than R.R. Donnelley & Sons. R.R. Donnelley & Sons is trading at a lower price-to-earnings ratio than Deluxe, indicating that it is currently the more affordable of the two stocks.
R.R. Donnelley & Sons pays an annual dividend of $0.56 per share and has a dividend yield of 5.8%. Deluxe pays an annual dividend of $1.20 per share and has a dividend yield of 1.5%. R.R. Donnelley & Sons pays out -7.9% of its earnings in the form of a dividend. Deluxe pays out 29.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. R.R. Donnelley & Sons is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares R.R. Donnelley & Sons and Deluxe’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|R.R. Donnelley & Sons||-7.15%||-42.52%||1.57%|
Insider & Institutional Ownership
85.6% of R.R. Donnelley & Sons shares are held by institutional investors. Comparatively, 92.7% of Deluxe shares are held by institutional investors. 2.3% of R.R. Donnelley & Sons shares are held by company insiders. Comparatively, 2.4% of Deluxe shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Volatility and Risk
R.R. Donnelley & Sons has a beta of 1.98, indicating that its share price is 98% more volatile than the S&P 500. Comparatively, Deluxe has a beta of 1.36, indicating that its share price is 36% more volatile than the S&P 500.
This is a summary of current ratings and target prices for R.R. Donnelley & Sons and Deluxe, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|R.R. Donnelley & Sons||0||0||0||0||N/A|
Deluxe beats R.R. Donnelley & Sons on 9 of the 13 factors compared between the two stocks.
About R.R. Donnelley & Sons
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.
Deluxe Corporation is a provider of payment solutions. The Company provides a suite of customer life cycle management solutions to its customers across multiple channels. The Company operates in three segments: Small Business Services segment, Financial Services segment and Direct Checks segment. The Company’s product and service offerings consist of checks, forms and accessories, and other products. The forms offered by the Company include deposit tickets and check registers. Its accessories and other products include checkbook covers and stamps. The Small Business Services segment is a provider of printed forms to small businesses. The Financial Services segment provides products and services to financial institution clients and offers a suite of financial technology (FinTech) solutions. The Direct Checks segment is a direct-to-consumer check supplier. It also offers fraud protection and security services, online and offline payroll services, and electronic checks (e-checks).
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