Sometimes a couple of steps forward is followed by a step or two back. The operating leverage and margin improvement story at Multi-Color (LABL)
isn't a one quarter or one year process, so I am not going to overreact
to one disappointing quarterly result. That said, the ongoing weakness
in pricing does highlight a significant challenge for the industry and
sometime to watch when rival CCL Industries (OTC:CCDBF) reports later this week.
I
continue to like Multi-Color as a multi-year play on greater
consolidation in the label industry, better gross margins and operating
leverage, and industry shifts toward more advanced (and expensive) label
options. Consolidation has to be tempered with balance sheet risk and
operating leverage is not a straight line process, but Multi-Color's
basic thesis has not changed all that much. I continue to believe that
these shares are priced to provide a decent premium to market returns
over the next few years.
Follow this link for more:
Multi-Color Fades A Bit In The Third Quarter
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