Google Inc. (GOOG): Is RR Donnelley & Sons Co (RRD) Destined for Greatness?

On a more fundamental basis, Donnelly’s core printing business is nothing to get excited about. Donnelly has ample competition from both VistaPrint Limited (NASDAQ:VPRT) and Quad/Graphics, Inc. (NYSE:QUAD), neither of which is performing especially well on a share-price basis, and of which only Quad/Graphics has sustained any free cash flow momentum over the past couple of years:

RRD Total Return Price data by YCharts.

It’s not a strong industry right now. RR Donnelley & Sons Co (NASDAQ:RRD), unlike the small-business-focused VistaPrint, has occasion to tout its big corporate contracts, such as one renewed with the soon-to-merge Office Depot Inc (NYSE:ODP) for catalog and direct-mail printing, or one announced earlier this month with the International Airlines Group of Europe that also includes logistics and other related business services. The latter deal is somewhat more promising than the former — really, when was the last time you needed a bulk-mailed print catalog to decide what to buy at an office-supply store?

The market’s long discounted a rebound in this core business, which is why Donnelly’s forward P/E remains in the single digits (7.4, to be exact). Donnelly’s high debt load is also a concern, and a recent offering of 7.9% debt securities is another red flag. If the company is cash flow-positive, why does it need to keep going back to the debt well, especially at such unpalatable terms in a zero-interest-rate environment? The stock’s recent rebound offers some hope, and the dividend remains appealing, but RR Donnelley & Sons Co (NASDAQ:RRD)  has yet to offer the market real signs that it’s worth a long-term investment.

Putting the pieces together
Today, Donnelly has few of the qualities that make up a great stock, but no stock is truly perfect. Digging deeper can help you uncover the answers you need to make a great buy — or to stay away from a stock that’s going nowhere.

The article Is R.R. Donnelly Destined for Greatness? originally appeared on Fool.com and is written by Alex Planes.

Fool contributor Alex Planes has no position in any stocks mentioned. The Motley Fool recommends Google and Vistaprint and owns shares of Google.

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