LSC Communications (NYSE: LKSD) and Deluxe (NYSE:DLX) are both industrials companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, profitability, institutional ownership, earnings, dividends and analyst recommendations.

Profitability

This table compares LSC Communications and Deluxe’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
LSC Communications -0.32% -4.38% -0.61%
Deluxe 10.24% 27.56% 11.71%

Earnings & Valuation

This table compares LSC Communications and Deluxe’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
LSC Communications $3.65 billion 0.15 $106.00 million $0.29 53.69
Deluxe $1.85 billion 1.78 $229.38 million $4.08 16.80

Deluxe has higher revenue, but lower earnings than LSC Communications. Deluxe is trading at a lower price-to-earnings ratio than LSC Communications, indicating that it is currently the more affordable of the two stocks.

Dividends

LSC Communications pays an annual dividend of $1.00 per share and has a dividend yield of 6.4%. Deluxe pays an annual dividend of $1.20 per share and has a dividend yield of 1.8%. LSC Communications pays out 344.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Deluxe pays out 29.4% of its earnings in the form of a dividend.

Insider and Institutional Ownership

85.3% of LSC Communications shares are held by institutional investors. Comparatively, 92.6% of Deluxe shares are held by institutional investors. 2.5% of LSC Communications shares are held by company insiders. Comparatively, 2.4% of Deluxe 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 Ratings

This is a breakdown of recent ratings and recommmendations for LSC Communications and Deluxe, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
LSC Communications 0 4 0 0 2.00
Deluxe 0 0 0 0 N/A

LSC Communications currently has a consensus target price of $24.00, indicating a potential upside of 54.14%. Given LSC Communications’ higher possible upside, research analysts plainly believe LSC Communications is more favorable than Deluxe.

Risk and Volatility

LSC Communications has a beta of 6.07, indicating that its share price is 507% more volatile than the S&P 500. Comparatively, Deluxe has a beta of 1.37, indicating that its share price is 37% more volatile than the S&P 500.

Summary

Deluxe beats LSC Communications on 9 of the 14 factors compared between the two stocks.

About LSC Communications

LSC Communications, Inc. focuses on traditional and digital print, print-related services and office products. The Company’s segments are Print and Office Products. The Company, through its Print segment, provides a range of print product offerings, which include magazines, catalogs, retail inserts, books and directories. In addition to printed products, the Company also provides a number of print-related services, such as supply chain management, mail services, e-book formatting and distribution services. Its Print segment services over 3,000 customers, including publishers of magazines, books and directories, online retailers, catalogers, mass merchandisers and contract stationers. In its Office Products segment, the Company manufactures and sells a range of branded and private label products, primarily within the core categories, including filing products; note-taking products; binder products; tax and stock forms, and envelopes.

About Deluxe

Deluxe Corporation is a provider of payment solutions. The Company provides a suite of customer life cycle management solutions to its customers across multiple channels. The Company operates in three segments: Small Business Services segment, Financial Services segment and Direct Checks segment. The Company’s product and service offerings consist of checks, forms and accessories, and other products. The forms offered by the Company include deposit tickets and check registers. Its accessories and other products include checkbook covers and stamps. The Small Business Services segment is a provider of printed forms to small businesses. The Financial Services segment provides products and services to financial institution clients and offers a suite of financial technology (FinTech) solutions. The Direct Checks segment is a direct-to-consumer check supplier. It also offers fraud protection and security services, online and offline payroll services, and electronic checks (e-checks).

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