Yahoo Finance What to Expect from R.R. Donnelley (RRD) in Q1 Earnings? - Analyst Blog
One of the leading providers of commercial printing, information services and logistics, R.R. Donnelley & Sons Company RRD is set to report its first-quarter 2015 results on May 7. Last quarter, the company posted positive earnings surprise of 34.78%. Let’s see how things are shaping up for this announcement.
Factors at Play
Donnelley has a dominant presence in the printing solutions market backed by its comprehensive global manufacturing and services platform, scale and geographic presence and strong relationship with blue-chip customers. The company is the largest printer in North America and serves 97% of the Fortune 500 companies.
We believe that the company’s strategic acquisitions will positively impact the first-quarter top line. It should be noted that the company acquired 16 companies during 2010-2014 for approximately $1.16 billion. These acquisitions have not only expanded its product portfolio but its customer base as well.
Moreover, the company continues to win multi-year, multi-million-dollar contracts from the likes of ZAGG Inc. ZAGG, Williams-Sonoma WSM, IAG, Guidepost, Parke-Bell Ltd. and Office Depot ODP. We believe that the new contract wins bode well for the company as these reflect its superior technology and growing reputation. This will further boost the company’s market share.
Nonetheless, we expect Donnelley’s first-quarter bottom line to be negatively impacted by persistent pricing pressure, volatility in raw material prices and increasing market competition. Moreover, increasing adoption of e-books among readers remains a major concern for its legacy printing business.
Earnings Whispers
Our proven model does not conclusively show that Donnelley will beat earnings estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 30 cents. Hence, the difference is 0.00%.
Zacks Rank: Donnelley’s Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Here are a couple of companies, which you may want to consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
NV5 Holdings, Inc. NVEE, with an Earnings ESP of +10.00% and a Zacks Rank #1 (Strong Buy).
Actavis plc ACT, with an Earnings ESP of +0.78% and a Zacks Rank #2 (Buy).
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DONNELLEY (RR) (RRD): Free Stock Analysis Report
OFFICE DEPOT (ODP): Free Stock Analysis Report
ZAGG INC (ZAGG): Free Stock Analysis Report
WILLIAMS-SONOMA (WSM): Free Stock Analysis Report
ACTAVIS PLC (ACT): Free Stock Analysis Report
NV5 HOLDING INC (NVEE): Free Stock Analysis Report
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