RE:RE:RE:RE:RE:5 year chart of SXP ..It was $4.50 in 2017I would argue that investors would have devalued the envelope market either way. Imo, the more recent strategy is the good one to build long term business value. For the business value to be higher, they probably should have cut the dividend 5 years ago to invest sooner into packaging, which would have supported a higher valuation today.
If you compare the metrics from the Oct 2016 high ($4.46) with those of 2021, the performance of the company is higher everywhere other than debt.
Revenue per share: Jul 2021 = 7.50, Oct 2016 = 5.50
EPS per share: Jul 2021 = 0.50, Oct 2016 = 0.45
Long term debt per share: Jul 2021 = 1.83, Oct 2016 = 0.89
Operating cashflow per share (before changes in working capital): Jul 2021 = 0.90, Oct 2016 = 0.71
Shareholder book value per share: Jul 2021 = 3.31, Oct 2016 = 2.51
Considering that they had to deal with a dwindling market (envelopes), the management has been able to grow revenue, earnings operating cashflows and book value over time. A stock isn't a pump and dump (which it would be, if value wasn't built on the business performance but on management's marketing) and the management's execution has been relatively good when you look at business performance.
The market has obviously changed its base valuation as the envelope business has been really discounted, which can be seen by a shift of market price to book value from 1.8x in 2016 to 0.7x in 2021.
Imo, the management's focus on reducing debt to get them some more room for other acquisitions/business development and buying back shares while the envelope business is unfairly discounted by the market is the right call and will build more value in time than the reintroduction of a dividend. If they can keep those 2021 metrics despite the envelope's global market's size going down each year and keep evolving their business into other areas (like packaging), the market's appreciation will only keep going up from here.