Since
I first heard of Innerworkings, I’ve followed the company on and off, mostly
off. But, quite recently, I noticed that
Innerworking’s share price had fallen quite a bit, so I decided to look a bit
further.
After
the company released its Q3 2013 numbers, which were disappointing and missed
analysts’ estimates considerably, I read the transcript of the company’s
earnings call, which was posted on seekingalpha.com the morning after the
earnings call took place. I can
generally follow information, comments, questions and answers about companies
involved in printing services, print management services and
reprographics services, but, for the life of me, the comments made by the
company’s officers, during the earnings call, seemed to be full of spin. To the point where I got lost. After I read the transcript, I found an
article about the company, put up on seekingalpha.com on September 25th,
several weeks before INWK released its Q3 2013 numbers. Wow, the author of that article was dead on,
when he placed INWK in “the Danger Zone.”
Description of the company:
InnerWorkings,
Inc. (InnerWorkings) is a provider of global print management and promotional
solutions to corporate clients across a range of industries. The Company's
software applications and database create a solution that stores, analyzes and
tracks the production capabilities of the Company's supplier network, as well
as quote and price data for print jobs. The Company offers a range of print,
fulfillment and logistics services. The Company procures printed products for
clients across a range of industries, such as retail, financial services, hospitality,
non-profits, healthcare, food and beverage, broadcasting and cable, education,
transportation and utilities. Utilizing the Company's technology and database,
the Company provides its clients a global solution to procure and delivers
printed products. In August 2013, the Company announced that it has acquired
EYELEVEL, a global provider of permanent retail displays and store fixtures.
On September 25th, 2013,
Innerworking’s share price closed at $10.01.
On November 7th, this “note”
appeared on seekingalpha.com under “market currents” …
“InnerWorkings
collapses on slashed guidance, flurry of downgrades”
InnerWorkings (INWK -36.7%) shares shed more than a third of their value after
the company missed on the bottom line in Q3 and slashed guidance.
With just 1 quarter remaining,
management cut full-year guidance to revenue of $865M-$880M from $910M-$940M
(consensus of $913.9M) and EPS of $0.16-$0.20 from $0.45-$0.50 ($0.45). The
damage was attributed to weak customer results at
acquired Production Graphics and a "slower ramping expected in Q4 of the
larger new enterprise deals landed earlier in 2013."
Rubbing salt
into the wound, William Blair, Craig-Hallum, and Barrington Research downgraded the stock to Hold/Perform.
On November 22nd, 2013,
Innerworking’s share price closed at $6.89.
Above, I referred to this article, take a
look:
Danger Zone: InnerWorkings
Sep 25 2013,
Article authored by David Trainer
InnerWorkings
(INWK), a new addition to the Most Dangerous Stocks for September, is in
the Danger Zone this week. INWK is a classic "roll-up" story that
enriches corporate and Wall Street insiders while destroying shareholder value.
The company is buying up competitors in the fragmented print management
industry to boost EPS and give the illusion of growth.
Wall Street
Executing the "Roll-up" Strategy
Wall Street
firms can profit enormously from roll-up plays because they result in lots of
acquisitions and stock trading activity. At the heart of most roll-up plays,
there is a company that buys up lots of other companies within a fragmented
industry with the stated goal of creating efficiencies, economies of scale
and/or more bargaining power with suppliers, customers and/or regulators.
Read
the rest of David’s article at this link (the article is very interesting):
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