Bargains are hard to find since the latest market push. This company has lagged the market behind, and yet, the stock is trading at about 10-times earnings and has the ability to push higher. The economics favor the company and so does the economy. This is a great long term holding.
We determine the current worth of Acco Brands using both absolute as well as relative valuation methodologies to arrive at its intrinsic value. In general, an absolute valuation paradigm, as applied to this company, attempts to find the value of Acco Brands based exclusively on its
fundamental and basic
technical indicators. By analyzing Acco Brands's
financials, quarterly and monthly indicators, and related drivers such as
dividends, operating cash flow, and various types of growth rates, we attempt to find the most accurate representation of Acco Brands's intrinsic value. In some cases, mostly for established, large-cap companies, we also incorporate more traditional valuation methods such as dividend discount, discounted cash flow, or asset-based models. As compared to an absolute model, our relative valuation model uses a comparative analysis of Acco Brands. We calculate exposure to Acco Brands's
market risk, different
technical and
fundamental indicators, relevant financial multiples and ratios, and then
comparing them to Acco Brands's related companies.
Acco Brands Investment Alerts
Acco investment alerts and warnings help investors to get more proficient at understanding not only critical technical and fundamental signals but also the significant portfolio-centered indicators. These indicators include beta, alpha, and other risk-related measures that will help you in monitoring Acco Brands performance across your portfolios.Please check all
investment alerts for Acco
Acco Brands Valuation Ratios as Compared to Competition
Our valuation model uses many indicators to compare Acco value to that of its competitors to determine the firm's financial worth. You can analyze the relationship between different fundamental ratios across Acco Brands competition to find
correlations between indicators driving the intrinsic value of Acco.
Acco Brands Gross Profit
Acco Brands Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Acco Brands previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Acco Brands Gross Profit growth over the last 10 years. Please check Acco Brands'
gross profit and other
fundamental indicators for more details.
Is Acco Brands valued appropriately by the market?
Acco Brands makes office, school and calendar products, as their main focus, selling their products through commercial resellers and direct to consumers. The company, ACCO, has a market capitalization of $1.4 billion and it stock is trading at $12.80.
The company is a very well established, global brand. This positions the company to continue its earnings. As the world economy moves and expands, this company will do the same.
With the economy expanding as it has been over the course of the past year, and the stock market pushing all-time records, I have been searching diligently to find opportunities in the equity markets. This stock is a unique find. Here are some numbers for the past several years, specifically, this listing shows the total assets and gross revenue, respectively:
2012: $2,473 / $514
2013: $2,346 / $523
2014: $2,183 / $508
2015: $1,928 / $459
Both of these sets of numbers are declining. That in itself is not necessarily a bad thing. Keep in mind that in 2014 the world economies came to almost a screeching halt. This prompted many central banks around the world to take extreme measures to shore up each of their respective economies. So, looking at this initial list I do not necessarily see the declines being bad. Instead, what I am looking at is the assets/revenue ratio. That number is increasing from 21 to 23. This means that although overall assets are declining due to the slower economy, the company’s ability to create more revenue is improving. To me, that is a good sign of a company.
ACCO’s earnings-per-share is also increasing after the decline, as this listing shows:
2012: $1.24
2013: $0.68
2014: $0.81
2015: $0.79
Earnings have seen a dip, but have maintained a balance. At the same time, keep in mind the economy is expanding. These earnings are from an economic time when there was a general slowing in the United States and worldwide. Now, my expectation is that as the economy continues to mend so will the earnings. And, along with the earnings, this company is in a position to increase its total assets. If you combine the economy potential with how this company performs in any environment, there is a lot of potential.
But, one of the things that I really like about this company is that earnings are already looking to come in above $1.00 for the year of 2016. At the same time, the stock is trading at $12.80. That means that the stock is just slightly above the 10-times earnings that I am usually looking for. With the recent stock moves, especially after the Trump election, the earnings-per-share has been pushed all the way up above 25. Any stock that you buy you are essentially buying at a ratio that puts your earnings potential below 4%, whereas ACCO gives you about a 9% return. Bargains are getting harder and harder to locate. But, ACCO is something you can pick up right now.
With the overall earnings outlook for an established company such as ACCO, and the economy moving forward with a lot of potential, the company, and by extension, the stock is positioned to move upward at a better-than-average move. A lot of traders have overlooked this stock as it lacks name brand popularity. However, traders are going to want to find bargains in the markets, and very likely this stock will be pushed upward to a minimum of the 15-times earnings average that has been in the market for so many years. That would put this stock at roughly $19.00 per share, a good 50% move. ACCO deserves to be in your portfolio.
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David Taylor is a Senior Member of Macroaxis Editorial Board - Sector Analysis. David is a professional writer who writes for multiple investment news outlets. His primary focus is dynamic movements in financial markets and effects of economic volatility on North American industries and sectors. David has many years of experience in financial service industry including working with major banks as a FX trader. In his free time, he does a lot of outdoors type activities including rock climbing, mountain biking, hiking, mountaineering and kayaking in the summer, and snowboarding in the winter.
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