Standard Register (SR): Is Bigger Better for This Small Cap Printing and Communications Stock? RRD & VPRT

Printing and the various forms of marketing communications that need to be printed (like business cards and stationary) are fundamental to the needs of every business, meaning the recent share surge of small cap Standard Register Co (NYSE: SR) after it announced an acquisition along with its long-term performance against better known peers like RR Donnelley & Sons Co (NASDAQ: RRD) and VistaPrint Limited (NASDAQ: VPRT) is worth taking a closer look at. After all, Standard Register is up 363.2% since the start of the year verses a return of 113.4% for RR Donnelley & Sons Co and 75.9% for VistaPrint Limited.

What is the Standard Register Co?

Founded in 1912, small cap Standard Register is a recognized leader in the healthcare, financial services, commercial business and industrial markets whose core solutions consist of combinations of print, labels, services and software while legacy solutions primarily support common business transaction processing needs and consist mainly of printed products and distribution services. Basically, Standard Register is a printing company that manages and executes "mission-critical communications."

For reference, RR Donnelley & Sons Co is a global provider of integrated communications and more specifically premedia, printing, logistics and business process outsourcing services to clients in virtually every private and public sector while Netherlands based VistaPrint Limited is focused on giving the 50 million micro businesses professional marketing products and services at an affordable price.

What You Need to Know About Standard Register

Last Thursday, Standard Register announced it would acquire WorkflowOne, which provides printing, document management, distribution and marketing services to a large customer base, in a deal valued at $218 million in equity and assumed debt. The deal is being financed by assuming $210 million of long-term debt and through the issuance of warrants with an estimated value of $8 million. When the integration of both companies is completed, Standard Register expects to achieve $1 billion in annual revenue and $40 million in annual savings. However, it's a big deal for Standard Register because it had just $1 million in cash on its balance sheet as of March 31 and a market share of just $60 million – meaning financing and no major integration surprises will be critical to pull it off.

Standard Register also reported earnings which included $136.8 million in revenue and a net loss of $4.8 million verses $155.1 million in revenue and a net loss of $1.1 million for the same period last year. The company's CEO noted:

"Although we still face the volatility of a declining market for our traditional printing products, the investments we have made in technology-enabled solutions have created a portfolio with increasing relevance in the market. We are particularly enthused with the near-term and long-term value creation benefits of the acquisition announced this morning."

He ended his comments by saying:

"This is a bold move at the right time with the right financial structure. It makes our pension obligation more manageable, and gives us additional resources to execute within our strategy."

Of course, bold moves have a habit of backfiring; but then again, Standard Register probably needs some bold moves to succeed and this acquisition might just be it if the integration is done right. Moreover, Standard Register has also been working for several years to transition itself away from a traditional printing company into a provider of communications and marketing solutions. The stock was also surging back in March when the company announced it was investing $10 million into a new national hub for digital printing, kitting and distribution in Jeffersonville, Indiana as part of this transition effort and its recent earnings reports have all shone signs of improvement.

Share Performance: Standard Register Co vs. RRD and VPRT

On Wednesday, small cap Standard Register rose 1.80% to $14.15 (SR has a 52 week trading range of $2.25 to $16.75 a share) for a market cap of $83.7 million plus the stock is up 363.2% since the start of the year, up 236.9% over the past year and down 67.9% over the past year. RR Donnelley & Sons Co is up 113.4% since the start of the year, up 48.9% over the past year and up 22% since August 2009 while VistaPrint Limited is up 75.9% since the start of the year, up 51.4% over the past year and up 78.2% over the past five years.

As you can see from the above chart, Standard Register has not exactly been a winner over the long term while the performance of RR Donnelley & Sons Co and VistaPrint Limited have also been mixed.

Finally, here is a look at the latest technical charts for all three printing or communications stocks:

The Bottom Line. Despite the run up in share price and any uncertainty with the WorkflowOne acquisition, small cap Standard Register could be another turnaround story while the recent performance of peers RR Donnelley & Sons Co and VistaPrint Limited might ease the concerns of some investors.