Seeking Alpha: Vistaprint Still Consistently Inconsistent

Bullish sell-side analysts have long pushed Vistaprint N.V. (VPRT) as a way to play growth in small businesses and the advantages of online/web-based disintermediation in bringing more sophisticated marketing tools to the SMB sector. It all sounds good (it always has), but Vistaprint seems stuck in this yo-yo business model where sustainable, balanced growth seems elusive.

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Vistaprint Still Consistently Inconsistent

Seeking Alpha: Vistaprint May Have Sizable Potential, But Also A Great Deal To Prove

If you're a nimble trader, you might like Vistaprint (VPRT). These shares have spent most of the last four years chopping between $30 and $60, as the company's inability to perform on a consistent basis has created sharp sell-offs and subsequent rallies. Now the shares are up again on investor's confidence (or hope) that the company's turnaround/self-improvement efforts will lend stability and consistency to the business, and possibly also on confidence that conditions in Europe have bottomed.

I have a hard time sharing this enthusiasm. Although I believe the company has a leveragable edge in its printing operations, I'm not sure that's a dependable long-term growth driver. Likewise, I'm not confident that Vistaprint will emerge as a strong presence in digital marketing for small businesses. Last and not least, serving the small business community is inherently volatile - a large percentage of businesses fail and the constant "flow" of new and failing businesses won't help the company establish a lasting market presence.

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Vistaprint May Have Sizable Potential, But Also A Great Deal To Prove

Investopedia: Groupon Shows Some Vigor, But Much Work Waits To Be Done

Everything is relative in the stock market, and it's important to keep Groupon's (Nasdaq:GRPN) performance in context. Yes, Groupon does seem to be doing better, but bears may well argue that means nothing more than Groupon is in a better state of certain death. Although I don't think Groupon is doomed, I do think there's a lot of work left to do, and Groupon still has a lot left to do before it convinces investors that this is a real business with real value for the long-term.

Some Improvements In The First Quarter
Expectations for Groupon have definitely seen downward revisions over the past year, but the company's first quarter results offer some optimism that management, sell-side analysts, and reality are all back on the same page.

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http://www.investopedia.com/stock-analysis/050913/groupon-shows-some-vigor-much-work-waits-be-done-grpn-fb-vprt-ctct-goog-yhoo.aspx

Investopedia: Paychex Limping Through The Cycle

Sometimes even strong management teams are handed macro situations that just overwhelm the inherent quality of their business. With new business creation still weak and pronounced sluggishness in small/medium-sized businesses (SMB), there's not much that Paychex (Nasdaq:PAYX) can do right now. Although this remains a quality play on an under-penetrated market that is key to future growth in the U.S. economy, the valuation already bakes in an eventual recovery.

Sluggish Second Quarter Performance  
Although Paychex arguably did a fine job of controlling that which was in their power to control, the second quarter had some definite weakness. Revenue rose less than 7% and missed not only the average analyst guess, but the low end of the range as well. Growth was even weaker (up less than 5%) when excluding the acquisitions of SurePayroll and ePlan.

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http://stocks.investopedia.com/stock-analysis/2011/Paychex-Limping-Through-The-Cycle-PAYX-INTU-NSP-ADP-VPRT1221.aspx

Investopedia: The Market's Bipolar Vistaprint Disorder

Small business service provider Vistaprint (Nasdaq:VPRT) is the gift that keeps giving for both market traders and financial writers. This stock seems to swing wildly between enthusiasm and dejection, a response no doubt due in part to the company's changing business model and the significant risks inherent in the current strategy. While Vistraprint is a consummate second-chance stock, right now does not look like the best time to take a flyer on this name.

The Third Quarter Looked Smudged  
Although Vistaprint's stock did well in the immediate aftermath of the earnings announcement, that may have been due in part to relief that the company met numbers and did not lower guidance again. The results that the company actually reported did not seem so worthy of such enthusiasm.  

Read the full piece at Investopedia:
http://stocks.investopedia.com/stock-analysis/2011/The-Markets-Bipolar-Vistaprint-Disorder-VPRT-OMX-FDX-SPLS-ODP-AMZN-INTU1031.aspx

Investopedia: The Vistaprint Roller Coaster Screams Down Again

For as long as small business marketing specialist Vistaprint (Nasdaq:VPRT) has been on my watchlist, it has been an unusually volatile stock. That's not so unusual for a stock that frequently trades at such rich valuation multiples, but it also seems to reflect a fairly twitchy investor base for this company. While the idea of a pure-play service company targeting small-to-mid-sized businesses is clearly appealing, it seems that nobody really has a good sense of what constitutes a "fair" price for the enterprise. 

A Good End to the Year, But...   
Vistaprint ended its fiscal year with 27% reported revenue growth, and 20% growth on a constant currency basis. That compared pretty favorably to analyst expectations, and 17% order growth was a solid number (as was the 68% of business coming from repeat customers). 


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http://stocks.investopedia.com/stock-analysis/2011/The-Vistaprint-Roller-Coaster-Screams-Down-Again-VPRT-FDX-ODP-AMZN-EBAY-INTU-LNKD0805.aspx

VistaPrint - Why I Stick To My Valuation Guns

I really do feel for anybody who held VistaPrint (Nasdaq: VPRT) in late April and/or last week, when the stock got smacked by disappointing guidance. I am not making fun of those people, but this stock is Exhibit A in why I can be pretty stubborn about sticking to my valuation principles.

Simply put, I really liked the business here (providing on-demand marketing and printing services for small businesses), but I thought the idea of paying $60 a share for it was mad.

In many respects, the results they just reported were not that bad. Revenue was up 22% to $164M, and came in about $5M light of consensus. Gross margins were up a bit (about 50bp), though higher ad spend took a bite out of the EBITDA margin (down 290bp yoy). All in all, EPS of 0.38 was actually a bit better than the 0.37 estimate.

Guidance, clearly, was a big issue. For September, the company put out a midpoint number of $162M, when the average guess was $173M, and EPS of $0.30 versus the consensus of $0.46. At that point, it was "look out below" for the stock.

Truth be told, nothing at VistaPrint is really surprising me right now. Results in the small/medium business category are pretty mediocre. Okay ... who is surprised by this? Look around the country and you do not see obvious signs of recovery, let alone strong recovery. Likewise, analysts were apparently disappointed to see that the company's national ad campaign did not really boost business.

Again ... why the surprise? This is a really rough time for small businesses, so how is a splashy campaign really going to change things? If you are struggling to meet payroll and facing the idea of having to cut employees, no ad campaign is going to get you to reach too far into your pockets.

Moving on, international revenue was stronger (up 31% in local currency). Also, the company saw a double-digit increase in new customers (up 14%), a strong increase in average daily orders (up 20%), and a modest uptick in average order value (up 4%). Those all look pretty good to me.

So, now what do we do about the stock?
Here are my basic inputs and assumptions:
Revenue - growing to $1,250 million in 2015 (13% 5-yr CAGR)
Free cash flow margin - growing from 7.8% this past year to 15% in 2015
Discount rate - 11%.

Run all that, and I get a valuation of $49.75. Drop the FCF% to 12.5% and that moves down to $43.
Either way that is not bad relative to today's price. Now, the stock is likely to have a tough row to hoe in the near-term - the company is going to be spending more and that is going to hurt margins. But I think there is a decent chance of this company leveraging an economic recovery in the small business sector.

So, maybe it is a "watch and wait" for now, but I certainly like the stock a lot more at $34 than I ever did at $60.