LSC Communications (NYSE: LKSD) and InnerWorkings (NASDAQ:INWK) are both small-cap industrials companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, analyst recommendations, risk, valuation, institutional ownership, profitability and dividends.

Valuation and Earnings

This table compares LSC Communications and InnerWorkings’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
LSC Communications $3.65 billion 0.15 $106.00 million $0.29 54.38
InnerWorkings $1.09 billion 0.50 $4.37 million $0.41 24.61

LSC Communications has higher revenue and earnings than InnerWorkings. InnerWorkings is trading at a lower price-to-earnings ratio than LSC Communications, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent ratings for LSC Communications and InnerWorkings, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
LSC Communications 0 4 0 0 2.00
InnerWorkings 0 0 4 0 3.00

LSC Communications presently has a consensus price target of $24.00, indicating a potential upside of 52.19%. InnerWorkings has a consensus price target of $14.00, indicating a potential upside of 38.75%. Given LSC Communications’ higher probable upside, research analysts clearly believe LSC Communications is more favorable than InnerWorkings.

Dividends

LSC Communications pays an annual dividend of $1.00 per share and has a dividend yield of 6.3%. InnerWorkings does not pay a dividend. LSC Communications pays out 344.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Institutional and Insider Ownership

84.4% of LSC Communications shares are owned by institutional investors. Comparatively, 80.8% of InnerWorkings shares are owned by institutional investors. 2.5% of LSC Communications shares are owned by insiders. Comparatively, 5.3% of InnerWorkings shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares LSC Communications and InnerWorkings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
LSC Communications 0.28% 24.72% 3.35%
InnerWorkings 2.04% 9.53% 4.27%

Summary

InnerWorkings beats LSC Communications on 8 of the 15 factors compared between the two stocks.

LSC Communications Company Profile

LSC Communications, Inc. focuses on traditional and digital print, print-related services and office products. The Company’s segments are Print and Office Products. The Company, through its Print segment, provides a range of print product offerings, which include magazines, catalogs, retail inserts, books and directories. In addition to printed products, the Company also provides a number of print-related services, such as supply chain management, mail services, e-book formatting and distribution services. Its Print segment services over 3,000 customers, including publishers of magazines, books and directories, online retailers, catalogers, mass merchandisers and contract stationers. In its Office Products segment, the Company manufactures and sells a range of branded and private label products, primarily within the core categories, including filing products; note-taking products; binder products; tax and stock forms, and envelopes.

InnerWorkings Company Profile

InnerWorkings, Inc. is a marketing execution company. The Company’s software applications and databases create an integrated solution that stores, analyzes and tracks the production capabilities of its supplier network, as well as detailed pricing data. The Company’s segments include North America and International. The North America segment includes operations in the United States and Canada. The International segment includes operations in Mexico, South America, Central America, Europe, the Middle East, Africa and Asia. The Company procures products for clients across a range of industries, such as retail, financial services, hospitality, consumer packaged goods, non-profits, healthcare, pharmaceuticals, food and beverage, broadcasting and cable and transportation. The Company’s clients are classified into over two categories, enterprise and transactional. The Company provides marketing materials to its transactional clients on an order-by-order basis.

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