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R.R. Donnelley & Sons Shares Plunged: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of integrated communications company R.R. Donnelley & Sons (Nasdaq: RRD  ) fell 15% today after the company gave full-year 2011 guidance.

So what: Management expects to report 2011 revenue of $10.6 billion and full-year free cash flow in the range of $650 million to $700 million. Revenue fell short of analyst estimates of $10.7 billion, and the company doesn't yet know the impact of a pension curtailment gain and other items, so it wasn't able to forecast earnings.

Now what: The company will report earnings on Feb. 22, at which time we'll find out more about why revenue was so short of estimates. In statements today, management focused on strong cash flow numbers, which investors are obviously overlooking for now. Until we hear more during the earnings call, I am steering clear of this stock because I don't want to get in ahead of even more disappointment.

Interested in more info on R.R. Donnelley? Add it to your watchlist by clicking here.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

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Read/Post Comments (3) | Recommend This Article (2)

Comments from our Foolish Readers

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  • Report this Comment On January 17, 2012, at 6:47 PM, nstollon wrote:

    "impact of a pension curtailment gain"

    Isn't this a good thing??

  • Report this Comment On January 17, 2012, at 7:35 PM, 1caflash wrote:

    Let's check the Facts. RRD announced another twenty-six cents-per-share quarterly dividend payable March 1, 2012. Fact: One Firm writes RRD is a "buy" and sets its price target at $16.00 a share. Fact: I bought 300 shares at about $12.75, bringing my total to slightly over 3,700. Fact: The dividend was not lowered. Fact: Somebody gave me an 8%+ yield on those shares. Fact: I have another order in to buy 300 more shares at a lower price if this action continues. My opinions: Many CEO's present conservative guidance. R.R. Donnelley will survive the crazy trading and might even announce a "buyback" if folks keep selling its shares lower. Do the Math. The share price went down by over 15% in one session. Even at the "lowest guidance", RRD's revenue would be down about 8.4%. What happens if the "doom and gloom" is overexaggerated? I like "great bargains"! RRD is in my DRIP.

  • Report this Comment On January 17, 2012, at 10:34 PM, mrk5555 wrote:

    The stock of RRD looks good up front....? but inside the store is questions, in the past years RRD been getting alot of printing contracts for very low bids and getting them. The only problem is..? there is no profit in these low contracts. producing product with no or little profit.sooner or later the real books will be opened up.T he revenue will fall short ,just of this big problem.another ''ERON'' IN THE WORKS.....

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R.R. Donnelley and… CAPS Rating: ***