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Cimpress (CMPR) Declines 38% YTD: What's Hurting the Stock?

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Shares of Cimpress plc (CMPR - Free Report) have declined since the beginning of this year. The decline in share price primarily reflects the adverse impacts of the coronavirus pandemic on the company’s operational performance.

Notably, Cimpress belongs to the Zacks Consumer Services - Miscellaneous industry, which in turn comes under the Zacks Consumer Discretionary sector. The industry is currently at the bottom 19% (with the rank of 207) of more than 250 Zacks industries.

Year to date, the company’s shares have lost 38% compared with the industry’s decline of 19.6% and the sector’s fall of 16.5%. Notably, the S&P 500 has declined 8.2% during the same period.

 


 

The company currently carries a Zacks Rank #5 (Strong Sell).

Factors Affecting the Company

The coronavirus outbreak has been impacting Cimpress’ operations. For instance, the company’s organic revenues in third-quarter fiscal 2020 (ended March 2020) decreased 9% year over year.  The decline was primarily attributable to the lower demand for its products, owing to the coronavirus-led market downturn, which hurt its small and medium-scale businesses significantly.

Also, in April 2020, the company’s bookings in the Vistaprint segment witnessed a decline of 51% on a year-over-year basis, while that for the Upload and Print segment decreased 57%. In addition, bookings in the National Pen and All Other segments fell 65% and 6%, respectively. Notably, the duration of the coronavirus pandemic and the impacts of the governmental regulations imposed in response to the crisis will likely have a bearing on the company’s results in the upcoming quarters.

Moreover, a highly leveraged balance sheet can be concerning for Cimpress. Notably, its long-term debt at the end of the fiscal third quarter was $1,647.2 million, reflecting a 27% increase over the previous quarter. Its total debt-to-total capital stood at 128.6% at the end of the fiscal third quarter versus 113.9% in the previous quarter. Also, the company’s cash and cash equivalents were just $228.3 million at the end of the fiscal third quarter.

On a P/E (TTM) basis, Cimpress has been overvalued compared with the industry, with respective tallies of 15.16x and 13.61x. This makes us cautious about the stock. In addition, the Zacks Consensus Estimate for the company’s earnings is pegged at $2.84 for fiscal 2020 (ending June 2020) and $1.40 for fiscal 2021 (ending June 2021), marking declines of 64.1% and 67.7% from the respective 30-day-ago figures. Notably, there have been two downward revisions in estimates for both fiscal 2020 and 2021 against no upward revision for both fiscal years in the past 30 days.

Stocks to Consider

Some better-ranked stocks are Activision Blizzard, Inc. (ATVI - Free Report) , Broadwind Energy, Inc. (BWEN - Free Report) and Graphic Packaging Holding Company (GPK - Free Report) . All companies currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Activision Blizzard delivered a positive earnings surprise of 31.34%, on average, in the trailing four quarters.

Broadwind Energy delivered a positive earnings surprise of 50.00%, on average, in the trailing four quarters.

Graphic Packaging delivered a positive earnings surprise of 9.59%, on average, in the trailing four quarters.

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