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Category: Stock Market and Ennis
Date: 27 September 2019 Stock Price: $20.17 We take a look at the 2nd quarter earnings release of their 2019 fiscal year of Ennis a production and sale of printed business products.
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About Ennis
Ennis, Inc. (NYSE:EBF), together with its subsidiaries, engages in the production and sale of printed business products. The Company designs, manufactures and sells an extensive line of stock and custom business forms, checks, commercial printing, promotional products, envelopes, tags, labels, pressure seal, presentation products, plastic cards and multimedia packaging.
Ennis, Inc., was founded in Ennis, Texas in 1909. Since then the growth through acquisitions has turned the company’s one employee into over 2,400 employees, all supported by the continuously expanding network. These employees, combined with over 110 years of experience, help serve more than 40,000 global distributors. The Ennis network currently runs 55 facilities across 21 states.
Ennis, Inc., was founded in Ennis, Texas in 1909. Since then the growth through acquisitions has turned the company’s one employee into over 2,400 employees, all supported by the continuously expanding network. These employees, combined with over 110 years of experience, help serve more than 40,000 global distributors. The Ennis network currently runs 55 facilities across 21 states.
Overview of Ennis' latest earnings report
The numbers we are interested in (for the quarter):
- Revenue: $108.816million (down from $98.591 million from the same quarter of the previous year)
- Revenue increased by 1.11% over the last 12 months
- Cost of goods sold: $76.358 (down from $68.268 million for the same quarter of the previous year)
- Cost of goods sold increased by 1.63% over the last 12 months
- Net income: $9.533 million (down from $9.567 million for the same quarter of the previous year)
- Diluted earnings per share: $0.37 (unchanged from$0.37 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 26.029 million (up from 25.685 million for the same quarter of the previous year)
- Cash and cash equivalents: $52.5 million
- Cash and cash equivalents per share: $2.02
- Cash and cash equivalents makes up 9.9% of Ennis's market capital
- Cash and cash equivalents makes up 14.46% of Ennis's total assets
- Accounts receivable: $43.689 million
- Accounts receivable makes up 12.03% of Ennis's total assets
- Stockholders equity of Ennis: $296.017 million
- Stockholders equity per share: $11.37
- Ennis's is trading at 1.77 times its stockholders equity which is outside the expected range of between 2 and 4 which most companies tend to trade at.
- Cash generated from operations (for the 6 months) : $27.718 million
- Cash generated from operations per share (for the 6 months): $1.06
Ennis' management commentary on the results and earnings guidance
Midlothian, TX. September 23, 2019 — Ennis, Inc. (the “Company”), (NYSE: EBF), today reported financial results for the three and six months ended August 31, 2019.
Keith Walters, Chairman, Chief Executive Officer and President, commented by stating, “Overall we are pleased with our performance for the quarter. While our gross profit margin showed a slight decline from the sequential quarter, decreasing from 30.3% to 29.8%, our EBITDA margin was consistent in the low to mid 16% range. Our gross profit margin percentage continues to be impacted by our past four acquisitions, which all had gross profit margins considerably lower than our historical gross profit margin. While their margins are improving, until these acquisitions are fully integrated into our systems we would expect to continue to see a comparable negative impact on our consolidated gross profit margin percentage. With that being said, these same acquisitions added $35.4 million in sales and $0.08 in diluted earnings per share for the six month period. During the quarter, we completed the acquisition of The Flesh Company and its wholly-owned subsidiary, Impression Direct, Inc. The Flesh Company is truly regarded as one of the outstanding companies in the print industry with a heritage that dates back over 100 years. These companies provide business forms, checks, direct mail services, integrated products and labels. This transaction will be accretive to earnings. We continue to strategically repurchase our shares and acquired over 22,000 shares during the quarter. We have repurchased almost 294,000 shares since the acquisition of Wright Business Graphics, which represents about 35.4% of the shares issued as consideration for that acquisition. Given our strong financial position, we will continue to explore strategic opportunities as a way to profitably utilize our cash and leverage our balance sheet, and when advantageous, repurchase our shares in the marketplace.”
In Other News
On September 20, 2019 the Board of Directors declared a quarterly cash dividend of 22.5 cents a share on the Company’s common stock. The dividend is payable on November 8, 2019 to shareholders of record on October 11, 2019.
Keith Walters, Chairman, Chief Executive Officer and President, commented by stating, “Overall we are pleased with our performance for the quarter. While our gross profit margin showed a slight decline from the sequential quarter, decreasing from 30.3% to 29.8%, our EBITDA margin was consistent in the low to mid 16% range. Our gross profit margin percentage continues to be impacted by our past four acquisitions, which all had gross profit margins considerably lower than our historical gross profit margin. While their margins are improving, until these acquisitions are fully integrated into our systems we would expect to continue to see a comparable negative impact on our consolidated gross profit margin percentage. With that being said, these same acquisitions added $35.4 million in sales and $0.08 in diluted earnings per share for the six month period. During the quarter, we completed the acquisition of The Flesh Company and its wholly-owned subsidiary, Impression Direct, Inc. The Flesh Company is truly regarded as one of the outstanding companies in the print industry with a heritage that dates back over 100 years. These companies provide business forms, checks, direct mail services, integrated products and labels. This transaction will be accretive to earnings. We continue to strategically repurchase our shares and acquired over 22,000 shares during the quarter. We have repurchased almost 294,000 shares since the acquisition of Wright Business Graphics, which represents about 35.4% of the shares issued as consideration for that acquisition. Given our strong financial position, we will continue to explore strategic opportunities as a way to profitably utilize our cash and leverage our balance sheet, and when advantageous, repurchase our shares in the marketplace.”
In Other News
On September 20, 2019 the Board of Directors declared a quarterly cash dividend of 22.5 cents a share on the Company’s common stock. The dividend is payable on November 8, 2019 to shareholders of record on October 11, 2019.
Ennis (NYSE: EBF) stock price history
The image below, obtained from Google, shows the stock price history of Ennis (NYSE: EBF) over the last 5 years. And it's been a very good time for Ennis (NYSE: EBF). 5 years ago the stock was trading at $13.50 and its currently trading at $20.17. That's a return of 49.4% over the last 5 years. The stock is trading at a lot closer to its 52 week high of $22.00 than it is to its 52 week low of $17.36 which to us is a clear indication that the short term sentiment and momentum is very positive.
Ennis (NYSE: EBF) latest stock valuation
So based on the earnings report of Ennis (NYSE: EBF) what do we value Ennis (EBF) stock at? Based on their latest earnings report our valuation models provide a target price (full value price) for Ennis stock at $21.20 a stock. We therefore believe the stock of Ennis is close to being fully valued. We would therefore not advise long term fundamental or value investors buy into the stock of Ennis at its current price levels. Rather look to enter the stock of Ennis at least 10% below our target (full value) price of 21.20. So a good entry point into the stock would be around $19.10