ARC Document Solutions (NYSE: ARC) and InnerWorkings (NASDAQ:INWK) are both small-cap industrial products companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, valuation, profitability, risk, dividends, earnings and institutional ownership.

Volatility & Risk

ARC Document Solutions has a beta of 2.5, indicating that its stock price is 150% more volatile than the S&P 500. Comparatively, InnerWorkings has a beta of 1.59, indicating that its stock price is 59% more volatile than the S&P 500.

Profitability

This table compares ARC Document Solutions and InnerWorkings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ARC Document Solutions 2.72% 7.00% 2.91%
InnerWorkings 1.76% 8.84% 3.91%

Earnings and Valuation

This table compares ARC Document Solutions and InnerWorkings’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
ARC Document Solutions $400.01 million 0.40 $56.98 million $0.24 14.38
InnerWorkings $1.10 billion 0.50 $46.24 million $0.35 29.49

ARC Document Solutions has higher revenue, but lower earnings than InnerWorkings. ARC Document Solutions is trading at a lower price-to-earnings ratio than InnerWorkings, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

70.7% of ARC Document Solutions shares are held by institutional investors. Comparatively, 80.0% of InnerWorkings shares are held by institutional investors. 14.9% of ARC Document Solutions shares are held by company insiders. Comparatively, 5.3% of InnerWorkings shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and target prices for ARC Document Solutions and InnerWorkings, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ARC Document Solutions 0 0 1 1 3.50
InnerWorkings 0 0 2 0 3.00

ARC Document Solutions currently has a consensus target price of $5.25, suggesting a potential upside of 52.17%. InnerWorkings has a consensus target price of $14.00, suggesting a potential upside of 35.66%. Given ARC Document Solutions’ stronger consensus rating and higher possible upside, equities analysts plainly believe ARC Document Solutions is more favorable than InnerWorkings.

Summary

InnerWorkings beats ARC Document Solutions on 8 of the 15 factors compared between the two stocks.

About ARC Document Solutions

ARC Document Solutions, Inc. (ARC) is a document solutions provider for the architectural, engineering and construction (AEC) industry. The Company also provides document solutions to businesses of various types. ARC’s offerings include managed print services (MPS), offsite services, archive and information management (AIM), specialized color printing, Web-based document management applications, digital shipping/managed file transfer, and equipment and supplies sales. MPS is an onsite service where it installs a complete document solution platform in its customers’ offices and project sites. Its Offsite Services offering operates over 180 offsite service centers. AIM enables its customers to store information and intellectual property in a cloud-based and searchable digital archive. The Specialized Color Printing offering is focused on color printing, finishing and assembly of graphic materials. Its Web-Based Document Management Applications develop and offer tools to its customers.

About InnerWorkings

InnerWorkings, Inc. is a marketing execution company. The Company’s software applications and databases create an integrated solution that stores, analyzes and tracks the production capabilities of its supplier network, as well as detailed pricing data. The Company’s segments include North America and International. The North America segment includes operations in the United States and Canada. The International segment includes operations in Mexico, South America, Central America, Europe, the Middle East, Africa and Asia. The Company procures products for clients across a range of industries, such as retail, financial services, hospitality, consumer packaged goods, non-profits, healthcare, pharmaceuticals, food and beverage, broadcasting and cable and transportation. The Company’s clients are classified into over two categories, enterprise and transactional. The Company provides marketing materials to its transactional clients on an order-by-order basis.

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