ARC Document Solutions - risky trend reversal play
The printing business isn't exactly a booming industry, and ARC Document Solutions has fallen nearly 50% since its 2018 peak, and even more than that since 2017.
However, ARC is a surprisingly strong company in this space. For the full year 2018, it increased its revenue, sales, earnings, and cash flow over its 2017 numbers. The company's full year guidance for 2019 is on track with its 2018 performance, in the range of $0.17-.22 per share. In Q1 2019 sales declined year-over-year, but earnings and cash flow increased due to an effective cost reduction strategy. In that quarter, ARC reiterated its full-year guidance.
So overall, it's safe to say that the stock price has moved exactly the wrong direction, given the strength of the company and of its numbers. Apparently investors are betting against ARC because they just don't the printing sector has much future, not because of any inherent problems with the company.
But here's thing: ARC is much more than just a printing company! For instance, for several years it's been a top provider of compliance solutions for the healthcare industry, and this month it announced that it's extending that business with a new digital platform. ARC is a big business-to-business seller of marketing materials, and has expanded its large-format printing capabilities at several locations since its last earnings report. It uses cloud-based technology to manage collaboration across its work force. According to a recent employee review on Glassdoor, ARC has also expanded into "Drone Services," "3D Printing," and "smartscreens" for use by architects and engineers. In short, ARC is keeping up with the digital revolution by transforming itself into a business-to-business technology and digital records management company!
ARC's next earnings are coming up August 6. It goes into earnings with such strong analyst ratings: a 10/10 Equity Summary Score from Thompson Reuters StarMine. From a technical perspective, ARC has been forming some nice bullish divergences and recently broke a 2-week downward trend line. It has some support from 2018 lows in the 1.66-1.85 range. Volume Friday was on the buy side.
However, ARC is a surprisingly strong company in this space. For the full year 2018, it increased its revenue, sales, earnings, and cash flow over its 2017 numbers. The company's full year guidance for 2019 is on track with its 2018 performance, in the range of $0.17-.22 per share. In Q1 2019 sales declined year-over-year, but earnings and cash flow increased due to an effective cost reduction strategy. In that quarter, ARC reiterated its full-year guidance.
So overall, it's safe to say that the stock price has moved exactly the wrong direction, given the strength of the company and of its numbers. Apparently investors are betting against ARC because they just don't the printing sector has much future, not because of any inherent problems with the company.
But here's thing: ARC is much more than just a printing company! For instance, for several years it's been a top provider of compliance solutions for the healthcare industry, and this month it announced that it's extending that business with a new digital platform. ARC is a big business-to-business seller of marketing materials, and has expanded its large-format printing capabilities at several locations since its last earnings report. It uses cloud-based technology to manage collaboration across its work force. According to a recent employee review on Glassdoor, ARC has also expanded into "Drone Services," "3D Printing," and "smartscreens" for use by architects and engineers. In short, ARC is keeping up with the digital revolution by transforming itself into a business-to-business technology and digital records management company!
ARC's next earnings are coming up August 6. It goes into earnings with such strong analyst ratings: a 10/10 Equity Summary Score from Thompson Reuters StarMine. From a technical perspective, ARC has been forming some nice bullish divergences and recently broke a 2-week downward trend line. It has some support from 2018 lows in the 1.66-1.85 range. Volume Friday was on the buy side.
Comment:
ARC has turned out to be one of my best picks yet. It surged through another trend line yesterday, and it's headed toward a third, even longer-term trend line. This morning it hit 2.10 during the premarket session.
