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Multi-Color Corporation (LABL): A World Full of Labels

Risks

With customers like Procter & Gamble and Colgate-Palmolive, Multi-Color’s not very vulnerable to a recession. Multi-Color Corporation (NASDAQ:LABL) released a relatively upbeat 2009 annual report when other companies struggled. The label maker’s acquisition strategy does have risks, though. At the end of fiscal 2012, Multi-Color reported $342 million of goodwill and $117 million of intangible assets on its balance sheet, and $810 million in total assets. Multi-Color hasn’t released its 10-K for fiscal 2013 yet.

Multi-Color may also need to buy smaller label makers to maintain its sales growth. The label maker reported that its sales rose by $149.6 million in fiscal 2013, but acquisitions and start-ups were responsible for $139.7 million of this sales increase.

Takeaway

Multi-Color’s expansion strategy has opened up international markets, improved its margins, and reduced its dependence on its main customers. The company’s wine label maker acquisitions also make a lot of sense, because Multi-Color’s labeling expertise could make a big difference for a winery. The label maker’s balance sheet and organic growth figures highlight potential risks, but the company still looks like it’s worth it. Multi-Color had a five star CAPS rating and unanimous approval from CAPS all star members on May 23, 2013. This label maker’s strategy looks like it’s paying off.

Eric Novinson has no position in any stocks mentioned. The Motley Fool recommends Procter & Gamble.

The article A World Full of Labels originally appeared on Fool.com.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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