Printing companies are evolving rapidly, and investors are picking up on it. Industry expert Peter Schaefer wrote for Printing Impressions that as printers adapt and grow, they become more and more appealing to private purchasers. In fact, EBITDA (earnings before interest, taxes, depreciation and amortization) figures are rising throughout the industry as a result of the transition most businesses are making from boring traditional products and practices to new, exciting and investment-worthy ideas.
What kind of changes are being made?
Publishers Weekly contributor Andrew Pate noted that printing companies are moving forward by ditching outdated, expensive presses in favor of more modern high-speed ink-jet and digital systems that increase efficiency. They are also targeting new markets, some of which had previously been considered unattractive.
Schaefer added that the print companies that had survived through the economic recession and the blossoming of the digital age – and subsequent paper-free gimmicks – have been smart, and have taken steps to transform themselves in order to remain not just profitable, but competitive. Some businesses have also taken to providing digital printing solutions in addition to traditional ones. This flexibility has helped them thrive in the midst of a then-declining market.
Why are investors so interested?
Schaefer attributed a portion of investor intrigue in print to the surge in positive macroeconomic signs – such as consumer confidence, historically low interest rates and banks being more willing to lend than they had been over the past half-decade or so. But he also recognized that the industry itself has been working hard to keep up with the digital economy, and that much of the hype is based in print innovations. The economy is improving steadily, and print companies are strategically riding its coattails, while also establishing their own success independently.
Publishing company Courier Corp. has experienced sales growth in the education, trade and religious fields recently. According to Pate, in 2014 education publishing sales saw 5 percent growth, while trade grew 3 percent and religion was up 4 percent. These modest increases can be seen industry-wide, and are taking place due to the aforementioned development of new technology and accessing new markets and demographics, and investors are encouraged by these figures.
Despite all this optimism from investors and analysts alike, Schaefer advised that the current boom might not last long. Citing companies that could have sold at peak prices in 2009 and missed out and then had to stick it out throughout the worst part of the recession, he recommended making a decision regarding investment sooner rather than later. If you're going to sell, do it now, while the market is high. But if you'd like to hang on to your business, you have to develop strategies for advancement and growth so that you remain viable in the future.
The investing value of printing companies is trending up, but it probably won't last forever. Just like every other industry, profitability is cyclical based on consumer needs and the strength or weakness of competing fields. Printers need to acknowledge this, and make smart decisions to further growth in the future.