Analyst Stephen Simpson, who follows ARC, has written an article about his feelings on whether ARC can capitalize on the improving economy. The article also touches on the reprographics industry in general. Some brief excerpts:
"The reprographics industry is changing and I'm not confident that the margins in the managed print services business will come close to what the company has achieved in the past. Although I can construct a bullish argument that would put ARC Document's potential fair value into the double-digits, my base-case assumption is much lower and not as much of a bargain relative to today's price when factoring in the risks of the company's changing business and end-markets."
"Now the company is going a step further and embracing the managed print services (MPS) opportunity. In MPS, a company steps in and manages the printing and document needs for an enterprise client. With enterprises spending about 1% to 3% of their revenue on printing costs and MPS providers advertising cost savings of 10% to 30%, it's an appealing market that I've seen Xerox (XRX) estimate at over $130 billion."
Read the entire article by clicking here.