ARC - ARC Document Solutions: When Valuation Is Not Enough (Technical Analysis)

2024-03-12 18:52:10 ET

Summary

• ARC Document Solutions' shares have fallen by over 11% in the past three months, with further losses potentially on the horizon.
• The company's top-line growth continues to drop sequentially, despite marginal gains in its recent rolling quarter.
• The sustained decline in ARC's plan-printing business and worrying technical indicators suggest volatility in the short term.

Intro

We wrote about ARC Document Solutions, Inc. ( ARC ) in November 2023 when we feared that continued sub-par growth would take its toll on the stock's share price. Despite reiterating our 'Hold' rating on the stock, ARC shares have fallen by over 11% over the past three months with further losses potentially on the horizon. We stated then that the market needed to see positive signs regarding the company's steep dividend GAAP payout ratio and sluggish top-line growth. Although ARC eked out a marginal top-line rolling quarter gain in its recent fourth quarter announced on February 28th, sales continue to drop sequentially notwithstanding the additional operating expense (site remediation cost stemming from an acquisition in the nineties) of $4 million that also adversely affected the income statement in Q4....

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