Donnelley Financial Solutions (DFIN) AI Stock Analysis

• Market Cap: $1.45B
• Dividend Yield: N/A
• Average Volume (3M): 416.08K
• Price to Earnings (P/E): 17.3
• Beta (1Y): 1.07
• Revenue Growth: -2.79%
• EPS Growth: -8.73%
• Country: US
• Employees: 1,800
• Sector: Financial
• Sector Strength: 85
• Industry: Financial - Capital Markets
• EPS (TTM): 1.24
• Shares Outstanding: 27,638,838
• 10 Day Avg. Volume: 374,568
• 30 Day Avg. Volume: 416,079
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.02
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 3.06
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $68.00
• Price Target Upside: 31.30% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

Donnelley Financial Solutions demonstrates robust financial performance with high profitability and effective leverage management. The significant positive sentiment from the earnings call, driven by software growth and strategic initiatives, enhances the outlook. However, technical indicators suggest potential caution due to overbought conditions, and valuation metrics indicate a fairly priced stock. The company must address revenue decline and negative free cash flow to improve its overall standing.

Positive Factors

Business transition

Donnelley Financial Solutions is successfully executing its plan to wind down low-margin print services while scaling its software offerings.

Software revenue growth

Software revenue grew at a healthy pace organically (11.6% Y/Y) and is now over 40% of revenue.

Stock buyback

DFIN has ramped up the buyback, with the company announcing that they have repurchased approximately 5% of the outstanding shares.

Negative Factors

De-Spac mergers impact

De-Spac mergers have been falling and have negatively impacted revenue, down 56% year over year.

Lowered financial expectations

Revenues and EBITDA have been lowered for the first and second quarters.

Market volatility

There is uncertainty in short-term capital markets volumes due to ongoing market volatility.

Donnelley Financial Solutions Business Overview & Revenue Model

Company Description

Donnelley Financial Solutions, Inc. operates as a risk and compliance solutions company worldwide. The company operates through four segments: Capital Markets – Software Solutions (CM-SS), Capital Markets – Compliance and Communications Management (CM-CCM), Investment Companies – Software Solutions (IC-SS), and Investment Companies – Compliance and Communications Management (IC-CCM). The CM-SS segment provides Venue, ActiveDisclosure, eBrevia, and other solutions to public and private companies to manage public and private transaction processes, extract data, and analyze contracts; collaborate; and tag, validate, and file SEC documents. The CM-CCM segment offers tech-enabled services and print and distribution solutions to public and private companies for deal solutions and SEC compliance requirements. The IC-SS segment provides clients with the Arc Suite platform that contains a comprehensive suite of cloud-based solutions and services that enable storage and management of compliance and regulatory information in a self-service and central repository for accessing, assembling, editing, translating, rendering, and submitting documents to regulators. The IC-CCM segment offers clients with tech-enabled solutions for creating and filing regulatory communications and solutions for investor communications, as well as XBRL-formatted filings pursuant to the Investment Act, through the SEC EDGAR system. This segment also provides turnkey proxy services, including discovery, planning and implementation, print and mail management, solicitation, tabulation services, shareholder meeting review, and expert support. Donnelley Financial Solutions, Inc. was founded in 1983 and is headquartered in Chicago, Illinois.

How the Company Makes Money

DFIN generates revenue through a combination of software subscription fees, professional services, and transaction-based fees. The company offers a suite of SaaS products that clients subscribe to on a recurring basis, providing a stable revenue stream. These products include solutions for regulatory compliance, data management, and financial reporting. Additionally, DFIN earns revenue through professional services by offering consulting and expertise to assist clients in implementing and optimizing their use of DFIN's software solutions. Another key revenue stream comes from transaction-based fees associated with specific financial transactions, such as capital markets activities and regulatory filings. Partnerships with financial institutions and large corporations also contribute to DFIN's earnings, as these partnerships often lead to long-term contracts and increased adoption of its solutions.

Donnelley Financial Solutions Financial Statement Overview

Summary

Donnelley Financial Solutions presents a solid financial profile with strong profitability and effective leverage management. The income statement reveals high profit margins, although declining revenue growth poses a challenge. The balance sheet is well-managed with a balanced debt structure. Cash flows are stable, yet the negative growth in free cash flow requires attention. Overall, the company is positioned well but should focus on revitalizing revenue growth and optimizing cash flow generation.

Income Statement

Donnelley Financial Solutions demonstrated strong profitability with a gross profit margin of 68% TTM, which improved from the previous year. Net profit margin stood at 11.6% TTM, indicating stable profit generation. However, the revenue growth has been declining with a 1.2% decrease TTM. The EBIT and EBITDA margins, at 11.9% and 26.2% respectively, reflect healthy operational efficiency despite the revenue downturn.

Balance Sheet

The company maintains a moderate debt-to-equity ratio of 0.49, suggesting a balanced leverage. Return on equity is strong at 21.5% TTM, showcasing effective use of shareholders' equity. However, the equity ratio is at 49.2%, indicating a moderate reliance on liabilities to finance assets. Overall, the balance sheet reflects financial stability with room for improvement in asset management.

Cash Flow

Operating cash flow to net income ratio is robust at 1.79, indicating efficient cash generation from operations. Free cash flow to net income ratio is 1.05, suggesting that most of the earnings translate into free cash flow. However, the free cash flow growth rate has been negative, necessitating improved cash management strategies.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
781.90M	797.20M	833.60M	993.30M	894.50M
	Gross Profit
484.00M	463.90M	463.40M	580.20M	398.50M
	EBIT
136.60M	110.00M	145.00M	219.30M	82.80M
	EBITDA
209.70M	192.00M	212.00M	290.50M	82.20M
	Net Income Common Stockholders
92.40M	82.20M	102.50M	145.90M	-25.90M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
57.30M	23.10M	34.20M	54.50M	73.60M
	Total Assets
841.60M	806.90M	828.30M	883.30M	865.60M
	Total Debt
141.40M	150.60M	213.90M	181.30M	301.30M
	Net Debt
84.10M	127.50M	179.70M	126.80M	227.70M
	Total Liabilities
405.50M	404.70M	498.80M	506.30M	617.80M
	Stockholders Equity
436.10M	402.20M	329.50M	377.00M	247.80M
Cash Flow		Free Cash Flow
105.20M	62.20M	96.00M	137.70M	123.10M
	Operating Cash Flow
171.10M	124.00M	150.20M	180.00M	154.20M
	Investing Cash Flow
-53.30M	-51.30M	-50.90M	-45.00M	-19.80M
	Financing Cash Flow
-82.10M	-84.60M	-121.10M	-154.90M	-77.50M

Donnelley Financial Solutions Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 51.79
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DFIN, the sentiment is Neutral. The current price of 51.79 is above the 20-day moving average (MA) of 43.84, above the 50-day MA of 44.86, and below the 200-day MA of 58.95, indicating a neutral trend. The MACD of 1.56 indicates Negative momentum. The RSI at 71.09 is Negative, neither overbought nor oversold. The STOCH value of 95.46 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for DFIN.

Donnelley Financial Solutions Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
XP	76 Outperform	$8.70B	10.47	23.13%	<0.01%	6.71%	6.81%
PJT	75 Outperform	$5.01B	25.26	96.33%	0.70%	16.04%	60.32%
LPLA	73 Outperform	$26.68B	23.77	42.26%	0.36%	23.20%	2.38%
DFIN	70 Outperform	$1.45B	17.34	21.74%	―	-2.79%	-8.73%
SF	69 Neutral	$9.21B	17.06	13.32%	1.92%	12.85%	20.21%
MC	66 Neutral	$4.42B	25.10	39.98%	4.47%	45.14%	―
Sector *	64 Neutral	$12.61B	9.79	7.95%	16985.69%	12.77%	-3.98%

Donnelley Financial Solutions Corporate Events

Donnelley Financial Solutions Amends Credit Agreement and Appoints New Director

On March 13, 2025, Donnelley Financial Solutions amended its Credit Agreement to include a $115 million term loan A facility and a $300 million revolving facility, maturing in 2030, to refinance existing loans. Additionally, Charles D. Drucker retired from the board, and Ayman Sayed, CEO of BMC Software, was appointed as a new director, bringing extensive software industry experience to the board.