DLX - Embedded Expectations Analysis - 2018 06 08
Deluxe Corporation (DLX:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with an 11.9x Uniform P/E, implying bearish expectations for the firm. Moreover, management has concerns about efficiencies, EPS, and costsSpecifically, management may lack confidence in their ability to drive further process improvements, and may have concerns about their ability to meet their three-year goals through 2020. Additionally, they may be downplaying concerns about GAAP EPS dilution in 2019 and 2020 as a result of their business transformation, and may lack confidence in their ability to meet their SBS revenue growth guidance. Furthermore, they may be concerned about weaker-than-expected performance in Checks, and may lack confidence in their ability to reduce manufacturing and SG&A costs in their Direct Checks segment
Deluxe is engaged in providing payment solutions. The company's marketing solutions and other services provides products and services designed to meet its customers' sales and marketing needs, as well as various other service offerings. The company's forms, accessories and other products provides printed business forms, including deposit tickets, billing forms, work orders, job proposals, purchase orders, invoices and personnel forms, as well as computer forms compatible with accounting software packages commonly used by small businesses. The company also provides other customized products, including envelopes, office supplies, ink stamps, labels, deposit tickets, check registers and checkbook covers.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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