Sunday, November 24, 2013

Innerworkings (NASDAQ: INWK) – Is this company a good investment for the long term? I don’t think so.

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 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 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 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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