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.
Please continue here:
Multi-Color Needs To Get Back On Offense
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