Key Takeaways
- Donnelley Financial shares jumped 15% after Q3 adjusted EPS of $1.07 beat the $0.84 consensus and Q4 guidance topped expectations.
- Software carried the quarter as IPO activity cooled, with ActiveDisclosure sales up about 24%.
- Workiva’s report next week will show whether that software demand is broad, and Goldman Sachs’s shrinking banking backlog points to the same IPO slowdown.
- At 10x forward earnings before today’s jump, below its 13x five-year average, the stock still looks cheap.
Donnelley Financial Solutions (DFIN) stock is up 15% after Q3 adjusted EPS of $1.07 beat the $0.84 consensus by about 27%, on revenue of $185.0 million against $179.9 million expected.
The news reaches Workiva (WK), which sells reporting software to many of the same corporate finance teams. And Donnelley’s read on a slower IPO calendar matters for underwriters like Goldman Sachs (GS).
Software picked up the slack
CEO Daniel Leib said in the release that “capital markets deal volume moderated from the levels we experienced during the first half of the year, especially in the number of priced IPOs.”
Software kept growing, up 5% to $95.2 million, or 51.5% of sales. ActiveDisclosure grew about 24%, which Leib said on the call was its fifth straight quarter of 20%-plus growth.
The company’s EBITDA margin beat the year-earlier quarter in each of the four quarters through September.
TIKR tracks 3 analysts on Donnelley Financial Solutions. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Donnelley Financial Solutions, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Donnelley Financial Solutions’ Analyst Ratings
Next week shows if it’s Donnelley or everyone
Workiva grew subscription and support revenue 19% in its Q2. If it holds near that pace when it reports next week, demand for reporting software is broad. If it slows while ActiveDisclosure keeps growing 20%-plus,
Goldman Sachs tells the same story on deals. Its Q3 equity underwriting revenue rose sharply from a year earlier, to $666 million, but its investment banking backlog shrank from the end of June.
Donnelley’s $50 million guide for transactional sales this quarter is one to check against Goldman’s underwriting when it reports on Jan. 19, 2027.
Still priced like a printer
Donnelly’s Q3 free cash flow rose 45% to $85.8 million, net leverage is 0.4x, and it has $118.5 million left on its buyback. Its Q4 revenue guide of $175-$180 million beats the $170.9 million consensus even at the low end.
The market still isn’t paying up for it. At the last close, Donnelley traded at 10x forward earnings, against its five-year average of 13x:
The recent jump raises the multiple to about 11x, which is still below historical levels.
My take: With software now half of sales and barely any net debt, Donnelley deserves at least its usual multiple.
Of course, that $50 million of transactional sales depends on the IPO calendar, and a stalled deal market would show up there first.
So what is Donnelley Financial stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
