Please ensure Javascript is enabled for purposes of website accessibility

Why Cimpress NV Stock Dropped Today

By Steve Symington - Jul 30, 2015 at 2:57PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

2:45 p.m. ET: Shares of the marketing materials specialist fell nearly 20% after the company reported earnings and announced a change in guidance.

What's happening: Shares of Cimpress NV (CMPR 6.40%) were down 19.7% as of 2:45 p.m. Thursday after the marketing and promotional materials company announced solid fiscal-fourth-quarter 2015 results, but also worried investors by saying it will no longer provide specific guidance.
Quarterly revenue climbed 13% year over year to $380.5 million, which resulted in a 10.4% decline in adjusted net income to $22.8 million, and a 12% decrease in adjusted net income per diluted share to $0.66. Analysts, on average, were only anticipating earnings of $0.38 per share, and revenue of $360.2 million.
In the outlook section of today's press release, however, it simply stated "Cimpress is focused on leveraging its investments for a strategic repositioning of its brand. The company also expects to benefit from acquisitions, expansion in new geographic areas and customer additions."

Why it's happening: To his credit, Cimpress CEO Robert Keane did release a lengthy letter to investors (opens PDF) along with today's earnings press release. In it, he outlines progress made so far in plans the company unveiled last year to generate shareholder value by becoming the "world leader in mass customization," maximizing intrinsic value per share, repositioning the Vistaprint value proposition to be more attractive to consumers, launching a multi-year project to build a software-based mass customization platform, and pursuing mergers and acquisitions to contribute to and benefit that platform. 

However, Keane also notes the company will not provide forward guidance beyond reviewing "how we think about value creation" and applying those concepts to the business, Cimpress' "general view of potential organic growth rates," and its discretionary growth spending plans for the upcoming fiscal year.

Consequently, Keane added, starting with the current quarter Cimpress "will stop reporting many of the operational metrics we have previously reported on because, given the changes we have made over the relatively recent past, they are no longer relevant to how our top management and supervisory board views and measures our business. We understand that these changes may require a transition in modeling and even in mind-set for some investors and analysts who are used to having the type of forward-looking guidance and retrospective operating metrics that we provided previously."

That's fair enough. Though our fickle market is notoriously averse to change, it doesn't sound like this newer, more-vague guidance is a result of underlying problems with the business. What's more, Cimpress promised to review and explain its thinking and contents of the letter in more detail during its upcoming investor day. In the end, if and when they convince investors this is truly the best way to maximize long-term intrinsic value per share, I won't be the least bit surprised if today's pullback doesn't last.

Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Cimpress. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Cimpress N.V. Stock Quote
Cimpress N.V.
$39.90 (6.40%) $2.40

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/09/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.