Donnelley Financial Solutions, Inc. (NYSE: DFIN)

Sector: Technology Industry: Software - Application CIK: 0001669811
Market Cap 1.50 Bn
P/B 3.56
P/E 46.29
P/S 2.00
ROIC (Qtr) 15.76
Div Yield % 0.00
Rev 1y % (Qtr) -2.34
Total Debt (Qtr) 162.70 Mn
Debt/Equity (Qtr) 0.38

About

Donnelley Financial Solutions, Inc., or DFIN, is a renowned global provider of financial regulatory and compliance solutions. The company, which operates under the ticker symbol DFIN and is publicly traded, specializes in delivering software and technology-enabled services to various clients, including public and private companies, mutual funds, and other regulated investment firms. DFIN's offerings cater to the regulatory and compliance needs of its clients in the capital markets and investment companies segments. DFIN's primary business activities...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 161.50M provides robust 0.99x coverage of total debt 162.70M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 22.70M provide 2.03x coverage of short-term debt 11.20M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 161.50M provides exceptional 13.13x coverage of interest expenses 12.30M, showing strong debt service capability.
  • Robust free cash flow of 101.20M exceeds capital expenditure of 60.30M by 1.68x, indicating strong organic growth funding capability.
  • Retained earnings of 554.70M provide full 3.66x coverage of long-term debt 151.50M, indicating strong internal capital position.

Bear case

  • Operating cash flow of 161.50M barely covers its investment activities of (60.20M), with a coverage ratio of -2.68, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating earnings of 52.40M show weak coverage of depreciation charges of 66.60M, with a 0.79 ratio indicating high capital intensity and potential reinvestment needs.
  • High depreciation of 66.60M relative to operating cash flow of 161.50M, which is 0.41x suggests significant maintenance capital requirements affecting free cash flow.
  • Retained earnings of 554.70M provide limited buffer against comprehensive income items of (18.90M), which is -29.35x, indicating elevated exposure to market risks.
  • Operating cash flow of 161.50M is outpaced by equity issuance of (136.60M) (-1.18 ratio), indicating concerning reliance on equity markets for funding operations.

Segments Breakdown of Revenue (2024)

Product and Service Breakdown of Revenue (2024)

Peer comparison

Companies in the Software - Application
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 SAP Sap Se 288.31 Bn 34.60 6.72 10.73 Bn
2 CRM Salesforce, Inc. 248.32 Bn 34.38 6.16 11.14 Bn
3 SHOP Shopify Inc. 212.27 Bn 119.19 19.85 1.12 Bn
4 INTU Intuit Inc. 180.73 Bn 43.89 9.30 6.78 Bn
5 UBER Uber Technologies, Inc 178.38 Bn 10.72 3.60 12.19 Bn
6 NOW ServiceNow, Inc. 146.98 Bn 84.91 11.60 2.40 Bn
7 ADBE Adobe Inc. 144.48 Bn 20.77 6.23 6.64 Bn
8 ADP Automatic Data Processing Inc 108.20 Bn 26.16 5.18 9.77 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.05 2.65
EV to Cash from Ops. EV/CFO 10.36 13.37
EV to Debt EV to Debt 10.28 57.69
EV to EBIT EV/EBIT 31.92 19.12
EV to EBITDA EV/EBITDA 8.25 15.00
EV to Free Cash Flow [EV/FCF] EV/FCF 16.53 14.69
EV to Market Cap EV to Market Cap 1.11 -92.28
EV to Revenue EV/Rev 2.23 4.60
Price to Book Value [P/B] P/B 3.56 4.26
Price to Earnings [P/E] P/E 46.29 -136.90
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -3.95
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 4.25
Dividend per Basic Share Div per Share (Qtr) 0.00 0.15
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 2.52
Interest Coverage Int. cover (Qtr) 4.26 -52.32
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -5.42 -259.78
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -32.44 9,763.58
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 1.61
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -60.51 -263.15
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -3.84 56.46
EBIT Growth (1y) % EBIT 1y % (Qtr) -62.22 -225.15
EBT Growth (1y) % EBT 1y % (Qtr) -67.84 -86.10
EPS Growth (1y) % EPS 1y % (Qtr) -66.47 123.84
FCF Growth (1y) % FCF 1y % (Qtr) -23.51 -36.82
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -4.50 95.08
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.92 0.58
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.02
Cash Ratio Cash Ratio (Qtr) 0.12 3.75
Current Ratio Curr Ratio (Qtr) 1.13 8.16
Debt to Equity Ratio Debt/Equity (Qtr) 0.38 0.17
Interest Cover Ratio Int Coverage (Qtr) 4.26 -52.32
Times Interest Earned Times Interest Earned (Qtr) 4.26 -52.32
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 15.80 -100.06
EBIT Margin % EBIT Margin % (Qtr) 6.98 -164.24
EBT Margin % EBT Margin % (Qtr) 5.34 -116.94
Gross Margin % Gross Margin % (Qtr) 62.70 58.20
Net Profit Margin % Net Margin % (Qtr) 4.30 -121.65