Critical Contrast: Multi-Color Corporation (LABL) versus ARC Document Solutions (ARC)

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

Insider & Institutional Ownership

76.3% of Multi-Color Corporation shares are owned by institutional investors. Comparatively, 71.0% of ARC Document Solutions shares are owned by institutional investors. 19.4% of Multi-Color Corporation shares are owned by insiders. Comparatively, 14.9% of ARC Document Solutions shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Risk and Volatility

Multi-Color Corporation has a beta of 0.83, indicating that its stock price is 17% less volatile than the S&P 500. Comparatively, ARC Document Solutions has a beta of 2.5, indicating that its stock price is 150% more volatile than the S&P 500.

Profitability

This table compares Multi-Color Corporation and ARC Document Solutions’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Multi-Color Corporation 6.38% 15.85% 5.57%
ARC Document Solutions 2.72% 7.00% 2.91%

Valuation and Earnings

This table compares Multi-Color Corporation and ARC Document Solutions’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Multi-Color Corporation $929.24 million 1.42 $158.28 million $3.47 22.31
ARC Document Solutions $400.01 million 0.41 $56.98 million $0.24 14.71

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

Analyst Ratings

This is a summary of current ratings and price targets for Multi-Color Corporation and ARC Document Solutions, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Multi-Color Corporation 1 3 0 0 1.75
ARC Document Solutions 0 0 1 1 3.50

Multi-Color Corporation currently has a consensus target price of $75.67, suggesting a potential downside of 2.24%. ARC Document Solutions has a consensus target price of $5.25, suggesting a potential upside of 48.73%. Given ARC Document Solutions’ stronger consensus rating and higher possible upside, analysts plainly believe ARC Document Solutions is more favorable than Multi-Color Corporation.

Dividends

Multi-Color Corporation pays an annual dividend of $0.20 per share and has a dividend yield of 0.3%. ARC Document Solutions does not pay a dividend. Multi-Color Corporation pays out 5.8% of its earnings in the form of a dividend.

Summary

Multi-Color Corporation beats ARC Document Solutions on 11 of the 17 factors compared between the two stocks.

Multi-Color Corporation Company Profile

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.

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.

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