Critical Review: Donnelley Financial Solutions (DFIN) versus Its Rivals

Donnelley Financial Solutions (NYSE:DFIN) is one of 21 public companies in the “Miscellaneous business services” industry, but how does it contrast to its peers? We will compare Donnelley Financial Solutions to similar businesses based on the strength of its earnings, dividends, analyst recommendations, valuation, risk, institutional ownership and profitability.

Profitability

This table compares Donnelley Financial Solutions and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Donnelley Financial Solutions	12.06%	22.70%	11.33%
Donnelley Financial Solutions Competitors	9.55%	9.81%	5.15%

Volatility & Risk

Donnelley Financial Solutions has a beta of 1.38, meaning that its share price is 38% more volatile than the S&P 500. Comparatively, Donnelley Financial Solutions’ peers have a beta of 4.45, meaning that their average share price is 345% more volatile than the S&P 500.

Valuation and Earnings

This table compares Donnelley Financial Solutions and its peers revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Donnelley Financial Solutions	$797.20 million	$82.20 million	17.78
Donnelley Financial Solutions Competitors	$15.50 billion	$2.53 billion	-29.94

Donnelley Financial Solutions’ peers have higher revenue and earnings than Donnelley Financial Solutions. Donnelley Financial Solutions is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Institutional and Insider Ownership

93.8% of Donnelley Financial Solutions shares are owned by institutional investors. Comparatively, 58.2% of shares of all “Miscellaneous business services” companies are owned by institutional investors. 11.9% of Donnelley Financial Solutions shares are owned by insiders. Comparatively, 10.6% of shares of all “Miscellaneous business services” companies are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and price targets for Donnelley Financial Solutions and its peers, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Donnelley Financial Solutions	0	0	3	0	3.00
Donnelley Financial Solutions Competitors	61	285	553	17	2.57

Donnelley Financial Solutions currently has a consensus target price of $77.00, indicating a potential upside of 35.30%. As a group, “Miscellaneous business services” companies have a potential downside of 4.91%. Given Donnelley Financial Solutions’ stronger consensus rating and higher probable upside, equities analysts plainly believe Donnelley Financial Solutions is more favorable than its peers.

Summary

Donnelley Financial Solutions beats its peers on 9 of the 13 factors compared.

About Donnelley Financial Solutions

Donnelley Financial Solutions, Inc. provides innovative software and technology-enabled financial regulatory and compliance solutions in the United States, Asia, Europe, Canada, and internationally. It operates through four segments: Capital Markets Software Solutions (CM-SS); Capital Markets Compliance and Communications Management (CM-CCM); Investment Companies Software Solutions (IC-SS); and Investment Companies Compliance and Communications Management (IC-CCM). The CM-SS segment provides Venue and ActiveDisclosure solutions to public and private companies to manage public and private transactional and compliance processes; collaborate; and tag, validate, and file SEC documents. The CM-CCM segment offers tech-enabled services and print and distribution solutions to public and private companies for deal solutions and SEC compliance requirements. The IC-SS segment provides clients with the Arc Suite platform that contains a comprehensive suite of cloud-based solutions, including ArcDigital, ArcReporting, ArcPro, and ArcRegulatory, as well as services that enable storage and management of compliance and regulatory information in a self-service and central repository for accessing, assembling, editing, translating, rendering, and submitting documents to regulators and investors. The IC-CCM segment offers tech-enabled solutions for creating, filing and distributing regulatory communications, and solutions for investor communications, as well as XBRL and iXBRL-formatted filings pursuant for Investment Company Act through the SEC’s EDGAR system. This segment also provides turnkey proxy services, including discovery, planning and implementation, print and mail management, solicitation, tabulation services, stockholder meeting review, and expert support. Donnelley Financial Solutions, Inc. was founded in 1983 and is headquartered in Chicago, Illinois.