RE:RE:Explanation please....Seems like the bet here is on their ability to reinvent themselves. At least they understand that they have to and they are small enough to be flexible unlike a large evpnvelope/print based company.
they seem to be taking the right steps to get into new business areas, some steps they make might be a mistake, but if they dont cost to much and they learn from them then that is all good.
It looks like they will leverage the revenue steam from the envelope and printing side of the opperation to build the new business. With a large envelope competitor going bankrupt it means the customers will need to get those supplies somewhere, and that can be here. That can help ensure the revenue stream from that dying portion of the business continues at a better pace then may have been originally expected. It may even go up or stop falling for a bit.
the dividend seems solid as the EPS is high enough to cover it, that is certainly NOT something you see every day in a stock paying about 6%, this means the share price is depressed based on current fundamentals, and even further depressed when you consider future potential. That depression of the stock price is totally based on the risk involved with them attempting to transition the business. The majority of their revenue is still from their old business and that revenue is going away.
So the bet is, will the new business grow fast enough, will the old business hold up long enough. If the mgt team is good the pn they will eventually get the new business going, and with the bankruptcy of the competition the old business should hold up longer, giving them time to maneuver.
likely worth taking a small position in my opinion. Also a possibility someone developing a packaging business like Richards Packaging could find this revenue stream appealing. They could aquire this for the packaging side and just let the envelope/printing side wind down while they rake in that revenue.
good info on this board!