Multi-Color Corp. – Value Analysis (NASDAQ:LABL) : October 4, 2016

Capitalcube gives Multi-Color Corp. a score of 66.

Our analysis is based on comparing Multi-Color Corp. with the following peers – InnerWorkings, Inc., R.R. Donnelley & Sons Company, Cimpress N.V., Cenveo, Inc. and Brady Corporation Class A (INWK-US, RRD-US, CMPR-US, CVO-US and BRC-US).

Investment Outlook

Multi-Color Corp. has a fundamental score of 66 and has a relative valuation of NEUTRAL.

Fundamental Score

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Company Overview

  • Considering peers, relative underperformance over the last year and the last month suggest a lagging position.
  • Multi-Color Corporation’s current Price/Book of 3.19 is about median in its peer group.
  • The market expects LABL-US to grow at about the same rate as the peers and to maintain the median returns it currently generates.
  • LABL-US‘s relatively high profit margins are burdened by relative asset inefficiency.
  • Changes in annual revenues (relative to peers) are better than the change in its earnings (relative to peers), implying the company is focused more on revenues.
  • Over the last five years, LABL-US‘s return on assets has declined from above median to about median among its peers, indicating declining relative operating performance.
  • The company’s relatively high pre-tax margin suggests tight control on operating costs versus peers.
  • While LABL-US‘s revenues in recent years have grown faster than the peer median, the market gives the stock a P/E ratio that is around peer median suggesting that the market has some questions about the company’s long-term strategy.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • LABL-US might have enough interest coverage to take-on additional debt prudently.

Access our research and ratings on Multi-Color Corp.

Leverage & Liquidity

LABL-US might have enough interest coverage to take-on additional debt.

  • While LABL-US‘s debt to enterprise ratio of 32.51% is on the high side compared to an overall benchmark of 25% (Note: The peer median is currently 27.40%), it also enjoys a relatively high interest coverage level of 4.14x which may give the company enough financial strength to support additional debt. Thus, the company is classified as having Some Capacity to raise more debt.
  • All 5 peers for the company have an outstanding debt balance.

LABL-US has maintained its Some Capacity profile from the recent year-end.

  • LABL-US‘s interest coverage is its highest relative to the last five years and compares to a low of 3.22x in 2012.
  • Compared to 2016, interest coverage has remained relatively stable for both the company (4.14x) and the peer median (3.50x).
  • LABL-US‘s debt-EV is over one standard deviation below its five-year average debt-EV of 43.01%.
  • The decrease in its debt-EV to 32.51% from 37.07% (in 2016) was also accompanied by a decrease in its peer median during this period to 27.40% from 29.68%.
  • Relative to peers, debt-EV fell 2.28 percentage points.

Access the detailed analysis for Multi-Color Corp.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
InnerWorkings, Inc. 21.33 1.57 7.82 35.33
R.R. Donnelley & Sons Company 52.55 1.22 2.25 17.48
Cimpress N.V. 22.28 0.6 2.86 28.14
Cenveo, Inc. 95.21 1.12 1.02 4.42
Brady Corporation Class A 12.78 2.44 15.09 52.18
Multi-Color Corporation 32.51 2.01 4.14 20.43
Peer Median 27.4 1.4 3.5 24.28
Best In Class 12.78 2.44 15.09 52.18

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Company Profile

Multi-Color Corp. engages in the provision of label solutions supporting various industries such as home and personal care, wine and spirit, food and beverage, healthcare and specialty consumer products. It offers pressure sensitive labels, in-mold labels, heat transfer labels, glue-applied labels, shrink sleeve labels, and graphic services. The company was founded in 1916 and is headquartered in Batavia, OH.


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