Reviewing Deluxe (DLX) and R.R. Donnelley & Sons (RRD)

Deluxe (NYSE: DLX) and R.R. Donnelley & Sons (NYSE:RRD) are both business services companies, but which is the better stock? We will compare the two companies based on the strength of their earnings, risk, analyst recommendations, profitability, institutional ownership, dividends and valuation.

Insider and Institutional Ownership

92.7% of Deluxe shares are owned by institutional investors. Comparatively, 85.8% of R.R. Donnelley & Sons shares are owned by institutional investors. 2.4% of Deluxe shares are owned by insiders. Comparatively, 2.3% of R.R. Donnelley & Sons shares are owned by 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 & Risk

Deluxe has a beta of 1.35, meaning that its share price is 35% more volatile than the S&P 500. Comparatively, R.R. Donnelley & Sons has a beta of 1.98, meaning that its share price is 98% more volatile than the S&P 500.

Dividends

Deluxe pays an annual dividend of $1.20 per share and has a dividend yield of 1.7%. R.R. Donnelley & Sons pays an annual dividend of $0.56 per share and has a dividend yield of 6.5%. Deluxe pays out 29.4% of its earnings in the form of a dividend. R.R. Donnelley & Sons pays out -7.9% 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.

Valuation & Earnings

This table compares Deluxe and R.R. Donnelley & Sons’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Deluxe $1.85 billion 1.87 $229.38 million $4.08 17.57
R.R. Donnelley & Sons $6.90 billion 0.09 -$495.90 million ($7.07) -1.22

Deluxe has higher earnings, but lower revenue 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.

Profitability

This table compares Deluxe and R.R. Donnelley & Sons’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Deluxe 10.24% 27.56% 11.71%
R.R. Donnelley & Sons -7.15% -42.52% 1.57%

Analyst Ratings

This is a breakdown of recent ratings and price targets for Deluxe and R.R. Donnelley & Sons, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Deluxe 0 0 0 0 N/A
R.R. Donnelley & Sons 0 0 0 0 N/A

Summary

Deluxe beats R.R. Donnelley & Sons on 9 of the 13 factors compared between the two stocks.

Deluxe Company Profile

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).

R.R. Donnelley & Sons Company Profile

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.

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