Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Schawk, Inc. (SGK), RR Donnelley & Sons Co (RRD): This Stock Makes Customers’ Brands Stick

RR Donnelley & Sons Co (NASDAQ:RRD), a global provider of integrated communication services, boasts of diversified revenue streams, with no single industry accounting for more than one fifth of its sales turnover. In contrast, Schawk, Inc. (NYSE:SGK) generates four fifths of its revenue from clients in the consumer packaged goods & private label industry. RR Donnelley & Sons Co (NASDAQ:RRD) is also North America’s largest printer, which puts it in a good position to benefit from industry trends such as smaller players exiting, customer demand for integrated solutions, and growth in digital print & print services. It has maintained its dividend per share of $1.04 for the past nine years and currently sports a forward dividend yield of 8.20%.

Schawk, Inc. (NYSE:SGK) has a forward dividend yield of 2.60% and currently trades at 9.8 times forward P/E. In comparison, Matthews International and R.R. Donnelley & Sons are valued by the market at 13.9 and 7.7 times forward P/E, respectively. While RR Donnelley & Sons Co (NASDAQ:RRD) might seem undervalued based on forward P/E and dividend yield, it is highly geared with $3.5 billion of debt on its books compared to its market capitalization of $2.3 billion.


Schawk’s graphic services draw consumers to their customers’ products and they cost only a fraction of the total advertising, promotion, and packaging costs for consumer products. This represents a strong economic moat for Schawk. A 2.60% dividend yield is the icing on the cake for an undervalued stock like Schawk with a forward P/E below 10.

The article This Stock Makes Customers’ Brands Stick originally appeared on and is written by Mark Lin.

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

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.