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

Risk and Volatility

LSC Communications has a beta of 5.96, suggesting that its stock price is 496% more volatile than the S&P 500. Comparatively, InnerWorkings has a beta of 1.68, suggesting that its stock price is 68% more volatile than the S&P 500.

Dividends

LSC Communications pays an annual dividend of $1.00 per share and has a dividend yield of 6.9%. InnerWorkings does not pay a dividend. 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.

Profitability

This table compares LSC Communications and InnerWorkings’ 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%
InnerWorkings 2.04% 9.53% 4.27%

Institutional & Insider Ownership

84.4% of LSC Communications shares are held by institutional investors. Comparatively, 80.8% of InnerWorkings shares are held by institutional investors. 2.5% of LSC Communications shares are held by company insiders. Comparatively, 5.3% of InnerWorkings shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation & Earnings

This table compares LSC Communications and InnerWorkings’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
LSC Communications $3.65 billion 0.14 $106.00 million $0.29 49.62
InnerWorkings $1.09 billion 0.51 $4.37 million $0.41 25.00

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

Analyst Ratings

This is a breakdown of current ratings and recommmendations for LSC Communications and InnerWorkings, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
LSC Communications 0 4 0 0 2.00
InnerWorkings 0 0 4 0 3.00

LSC Communications presently has a consensus target price of $24.00, indicating a potential upside of 66.78%. InnerWorkings has a consensus target price of $14.00, indicating a potential upside of 36.59%. Given LSC Communications’ higher probable upside, analysts clearly believe LSC Communications is more favorable than InnerWorkings.

LSC Communications Company Profile

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.

InnerWorkings Company Profile

InnerWorkings, Inc. is a marketing execution company. The Company’s software applications and databases create an integrated solution that stores, analyzes and tracks the production capabilities of its supplier network, as well as detailed pricing data. The Company’s segments include North America and International. The North America segment includes operations in the United States and Canada. The International segment includes operations in Mexico, South America, Central America, Europe, the Middle East, Africa and Asia. The Company procures products for clients across a range of industries, such as retail, financial services, hospitality, consumer packaged goods, non-profits, healthcare, pharmaceuticals, food and beverage, broadcasting and cable and transportation. The Company’s clients are classified into over two categories, enterprise and transactional. The Company provides marketing materials to its transactional clients on an order-by-order basis.

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