Friday, June 17, 2011

Shares of American Reprographics Company (ARC) are down 31.5% from mid-day on April 1, 2011 - Where's ARC stock headed from here?

Correction: Evidently, I was wrong about the closing price of ARC's stock. In the post below, you'll see that I've used $7.21 per share as the closing price on June 17, 2011. The correct closing price (per Google Finance, this morning) of ARC's stock, yesterday, was $7.17 per share. I'm not going to correct the Excel files mentioned in this post, since the change is minor.

On March 25th, I did an extensive post on this blog about RW Baird & Co’s then-just-announced upgrade action on ARC’s stock. Here’s a link to that post, if you care to read what I said back then before going on with the rest of today’s post.

Okay, I hope you re-read the March 25th post.

Here’s the rest of today’s post.

On March 24, 2011, ARC’s shares closed at $9.31 per share.

On March 25, 2011, equities research analysts at Robert W. Baird & Co. upgraded shares of American Reprographics Company (NYSE: ARC) to an “outperform” rating.

Within days of the upgrade action by RW Baird, ARC’s stock moved steadily higher, and, during the day on April 1st, 2011, ARC’s shares traded as high as $10.50 per share.

Trading volume on May 31, 2011, was particularly high – volume exceeded 520,000 shares that day and the price of ARC’s stock was up that day, closing at $9.38 per share.

But since April 1st, except for a few days in mid May for one day at the very end of May, ARC’s shares have drifted lower and today, June 17th, closed at $7.21 per share, after having fallen as low as $7.01 per share during the day. Trading volume, this past week, has been relatively high, compared to recent prior weeks.

On April 1st, 2011, when ARC was trading at $10.50 per share, ARC’s “market capitalization” was approximately $485 million.

At close of market today, Friday, June 17, 2011, ARC’s “market capitalization” was approximately $333 million.

That represents a fall-off in market cap of around $152 million, or about 31.5%! Just my opinion, of course, but to me, that’s quite a dramatic decline.

Recent news questions the strength of the U.S. recovery, and, as a result, major stock market indices have declined; on April 1, 2011, the S&P 500 closed at 1,332. Today, June 17, 2011, the S&P 500 closed at 1,271. That’s a decline (between those two dates) of around 4.6%.

According to information published on about “major holders” of ARC’s shares, 31 “entities” own approximately 86% of ARC’s outstanding shares.

I created an Excel file that shows these 31 major holders, including number of shares owned and percentage of total O/S stock owned by each entity.

You’ll find that Excel file at this google-docs address: (FILE PREPARED ON JUNE 17, 2011):

I created a second Excel file that shows the decline in value realized by these 31 major holders on their shares of ARC stock, from April 1, 2011 to today, June 17, 2011.

You’ll find that Excel file at this google-docs address: (FILE PREPARED ON JUNE 17, 2011)”

Okay, final statement about all this gobbledygook …

“What goes up, can come down, and vice versa.”

I don’t think that anyone can accurately predict where ARC’s stock price is going from here; up, down or sideways. So far this year, there’s been little, if any, positive news about the residential construction industry or about the non-residential construction industry, and, trend-wise, the AIA ABI Index readings have been mixed of late. Even thought ARC has initiatives that are not bound by what’s going on in the A/E/C industry, ARC is still “mostly” a reprographer heavily tied to the A/E/C industry.

I think we’re going to have to see some positive news about a recovery in the A/E/C industry before we’re going to see positive action in ARC’s shares.

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