LSC Communications (NYSE: LKSD) and Multi-Color Corporation (NASDAQ:LABL) are both small-cap industrial products companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, valuation, institutional ownership, profitability and analyst recommendations.

Insider and Institutional Ownership

85.3% of LSC Communications shares are held by institutional investors. Comparatively, 60.6% of Multi-Color Corporation shares are held by institutional investors. 2.5% of LSC Communications shares are held by insiders. Comparatively, 19.4% of Multi-Color Corporation shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and target prices for LSC Communications and Multi-Color Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
LSC Communications 0 4 0 0 2.00
Multi-Color Corporation 1 3 0 0 1.75

LSC Communications currently has a consensus price target of $24.00, suggesting a potential upside of 54.14%. Multi-Color Corporation has a consensus price target of $78.33, suggesting a potential upside of 7.60%. Given LSC Communications’ stronger consensus rating and higher probable upside, equities analysts plainly believe LSC Communications is more favorable than Multi-Color Corporation.

Earnings & Valuation

This table compares LSC Communications and Multi-Color Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
LSC Communications $3.65 billion 0.15 $106.00 million $0.29 53.69
Multi-Color Corporation $923.29 million 1.61 $60.99 million $3.39 21.47

LSC Communications has higher revenue and earnings than Multi-Color Corporation. Multi-Color Corporation is trading at a lower price-to-earnings ratio than LSC Communications, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares LSC Communications and Multi-Color Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
LSC Communications 0.28% 24.72% 3.35%
Multi-Color Corporation 6.10% 15.52% 5.55%

Volatility and Risk

LSC Communications has a beta of 6.07, meaning that its stock price is 507% more volatile than the S&P 500. Comparatively, Multi-Color Corporation has a beta of 0.78, meaning that its stock price is 22% less volatile than the S&P 500.

Dividends

LSC Communications pays an annual dividend of $1.00 per share and has a dividend yield of 6.4%. Multi-Color Corporation pays an annual dividend of $0.20 per share and has a dividend yield of 0.3%. LSC Communications pays out 344.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Multi-Color Corporation pays out 5.9% of its earnings in the form of a dividend.

Summary

LSC Communications beats Multi-Color Corporation on 8 of the 15 factors compared between the two stocks.

About LSC Communications

LSC Communications, Inc. focuses on traditional and digital print, print-related services and office products. The Company’s segments are Print and Office Products. The Company, through its Print segment, provides a range of print product offerings, which include magazines, catalogs, retail inserts, books and directories. In addition to printed products, the Company also provides a number of print-related services, such as supply chain management, mail services, e-book formatting and distribution services. Its Print segment services over 3,000 customers, including publishers of magazines, books and directories, online retailers, catalogers, mass merchandisers and contract stationers. In its Office Products segment, the Company manufactures and sells a range of branded and private label products, primarily within the core categories, including filing products; note-taking products; binder products; tax and stock forms, and envelopes.

About Multi-Color Corporation

Multi-Color Corporation (Multi-Color) is engaged in label solutions business, supporting brands, including producers of home and personal care, wine and spirit, food and beverage, healthcare and specialty consumer products. The Company serves international brand owners in North, Central and South America, Europe, Australia, New Zealand, South Africa and China and Southeast Asia with a range of label technologies in Pressure Sensitive, Glue-Applied (Cut and Stack), In-Mold, Shrink Sleeve and Heat Transfer. The Company also provides a range of print methods, including flexographic, lithographic, rotogravure, letterpress and digital, and in-house prepress services. The Company provides graphics and pre-press services for its customers at all of its manufacturing locations. These services include the conversion of customer digital files and artwork into proofs, production of print layouts and printing plates, and product mock ups and samples for market research.

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