ARC Document Solutions (NYSE: ARC) and R.R. Donnelley & Sons (NYSE:RRD) are both small-cap industrial products companies, but which is the better business? We will compare the two businesses based on the strength of their risk, profitability, earnings, dividends, institutional ownership, analyst recommendations and valuation.

Valuation and Earnings

This table compares ARC Document Solutions and R.R. Donnelley & Sons’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
ARC Document Solutions $406.32 million 0.32 -$47.86 million ($0.14) -19.71
R.R. Donnelley & Sons $6.90 billion 0.09 -$495.90 million ($7.07) -1.30

ARC Document Solutions has higher earnings, but lower revenue than R.R. Donnelley & Sons. ARC Document Solutions is trading at a lower price-to-earnings ratio than R.R. Donnelley & Sons, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

70.5% of ARC Document Solutions shares are held by institutional investors. Comparatively, 85.8% of R.R. Donnelley & Sons shares are held by institutional investors. 14.9% of ARC Document Solutions shares are held by company insiders. Comparatively, 2.3% of R.R. Donnelley & Sons shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Volatility & Risk

ARC Document Solutions has a beta of 2.29, suggesting that its stock price is 129% more volatile than the S&P 500. Comparatively, R.R. Donnelley & Sons has a beta of 1.98, suggesting that its stock price is 98% more volatile than the S&P 500.

Dividends

R.R. Donnelley & Sons pays an annual dividend of $0.56 per share and has a dividend yield of 6.1%. ARC Document Solutions does not pay a dividend. R.R. Donnelley & Sons pays out -7.9% of its earnings in the form of a dividend.

Profitability

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

Net Margins Return on Equity Return on Assets
ARC Document Solutions -1.70% 5.35% 2.27%
R.R. Donnelley & Sons -7.15% -42.52% 1.57%

Analyst Ratings

This is a breakdown of recent ratings for ARC Document Solutions and R.R. Donnelley & Sons, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ARC Document Solutions 0 2 0 1 2.67
R.R. Donnelley & Sons 0 0 0 0 N/A

ARC Document Solutions currently has a consensus price target of $4.63, suggesting a potential upside of 67.57%. Given ARC Document Solutions’ higher possible upside, research analysts plainly believe ARC Document Solutions is more favorable than R.R. Donnelley & Sons.

Summary

ARC Document Solutions beats R.R. Donnelley & Sons on 11 of the 15 factors compared between the two stocks.

ARC Document Solutions Company Profile

ARC Document Solutions, Inc. (ARC) is a document solutions provider for the architectural, engineering and construction (AEC) industry. The Company also provides document solutions to businesses of various types. ARC’s offerings include managed print services (MPS), offsite services, archive and information management (AIM), specialized color printing, Web-based document management applications, digital shipping/managed file transfer, and equipment and supplies sales. MPS is an onsite service where it installs a complete document solution platform in its customers’ offices and project sites. Its Offsite Services offering operates over 180 offsite service centers. AIM enables its customers to store information and intellectual property in a cloud-based and searchable digital archive. The Specialized Color Printing offering is focused on color printing, finishing and assembly of graphic materials. Its Web-Based Document Management Applications develop and offer tools to its customers.

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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