Thursday, July 13, 2017

Multi-Color Needs To Get Back On Offense

Multi-Color (NASDAQ:LABL) has done pretty well since my last update on the company. The shares are about 25% since August of 2016, trailing industry leader CCL Industries [CCL.TO] (OTC:CCDBF) by a few points, but still outperforming indices like the NASDAQ and Russell 3000 in a generally strong tape for smaller companies.

Not all of this performance has been entirely merited by recent performance. While the last quarter (the company's fiscal fourth quarter) was surprisingly strong, that was a welcome relief after several quarters of lackluster performance related in part to difficulties managing growth. What's more, the company has noticeably slowed its growth-by-acquisition strategy to address some of those issues.

Wall Street is forward-looking, and I believe there are credible arguments supporting better results in the future for Multi-Color. Management seems willing (if not eager) to get back to M&A, and it seems as though external compliance and legal costs will no longer be as significant of an issue. What's more, management has been attending to operating efficiency issues, and I believe there is room to take operating margins into the mid-teens over the next 10 years.

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Multi-Color Needs To Get Back On Offense

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