Back to top

Analyst Blog

On Aug 3, 2013, Zacks Investment Research upgraded R.R. Donnelley to a Zacks Rank #1 (Strong Buy). With a strong year-to-date return of 116.4% and a positive estimate revision trend, Donnelley is an attractive investment opportunity.

Why the Upgrade?

Impressive second quarter results, incremental revenue growth from acquisitions, robust logistics result and improving liquidity contributed to the upgrade. Additionally, Donnelley’s multi-million dollar contract wins from various companies remain a major positive catalyst.

Donnelley reported second quarter earnings of 45 cents per share that comfortably surpassed the Zacks Consensus Estimate by a couple of cents. Revenues increased 1.7% year over year to $2.57 billion and exceeded the Zacks Consensus Estimate by approximately $30.0 million.

Donnelley’s logistics business recorded robust organic revenue growth of 14.0% on a year-over-year basis, primarily driven by incremental revenues from acquisitions. Double-digit volume growth helped premedia revenues to grow 15.0% organically. Book directory and variable print unit organic revenues declined 2.4% and 0.6%, respectively in the quarter.

Donnelley reiterated its fiscal 2013 guidance. The company expects revenues to be in the range of $10.1 billion to $10.3 billion. The guidance assumes approximately $100.0 million negative impact from foreign exchange rates and lower paper sales.

The Zacks Consensus Estimate for fiscal 2013 increased 2.5% to $1.62 per share as most of the estimates were revised higher over the last 7 days. For fiscal 2014, the Zacks Consensus Estimate jumped 8.6% to $1.65 per share over the same period.

The long-term expected earnings growth rate for Donnelley is 7.5%.

Other Stocks to Consider

Investors can also consider other stocks that are doing well right now. These include Activision Blizzard (ATVI - Snapshot Report), Barrett Business Services (BBSI - Snapshot Report) and Moody’s Corp (MCO - Analyst Report). While Activision and Barrett carry a Zacks Rank #1 (Strong Buy), Moody’s carries a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
CENTURY ALU… CENX 22.53 +4.50%
ERBA DIAGNO… ERB 2.91 +4.30%
PLANAR SYST… PLNR 4.31 +3.86%
MALLINCKROD… MNK 72.17 +3.83%
GTT COMMUNI… GTT 12.06 +3.52%