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Donnelley Financial Solutions, Inc. (DFIN)
:DFIN

Donnelley Financial Solutions (DFIN) AI Stock Analysis

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Donnelley Financial Solutions

(NYSE:DFIN)

Rating:75Outperform
Price Target:
$62.00
▲(12.12%Upside)
Donnelley Financial Solutions scores a solid 75, reflecting its strong financial performance and strategic initiatives in software solutions. The company's profitability and operational efficiency are notable strengths, although declining revenue growth and negative free cash flow are areas of concern. The technical analysis shows bullish momentum, but caution is advised due to overbought conditions. The valuation is fair, supporting the overall positive outlook despite challenges in capital markets.
Positive Factors
Financial Performance
DFIN's 1Q results beat expectations on both the top and bottom line, as healthy capital markets trends helped growth come in better.
Share Buyback
DFIN has ramped up the buyback, with the company announcing that they have repurchased approximately 5% of the outstanding shares.
Software Revenue Growth
Software revenue grew at a healthy pace organically (11.6% Y/Y) and is now over 40% of revenue.
Negative Factors
Market Volatility
There is uncertainty in short-term capital markets volumes due to ongoing market volatility.
Revenue Impact
De-Spac mergers have been falling and have negatively impacted revenue, down 56% year over year.

Donnelley Financial Solutions (DFIN) vs. SPDR S&P 500 ETF (SPY)

Donnelley Financial Solutions Business Overview & Revenue Model

Company DescriptionDonnelley 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 MoneyDFIN makes money through a combination of subscription fees, transaction-based revenues, and professional services. The company offers cloud-based software solutions that clients pay for on a subscription basis, which provides a steady stream of recurring revenue. Additionally, DFIN generates income from transaction fees related to capital markets activities, such as initial public offerings (IPOs) and mergers and acquisitions (M&A). Professional services, including consulting and implementation support, also contribute to the company's earnings. DFIN's strategic partnerships with financial institutions and technology providers enhance its product offerings and expand its market reach, further driving revenue growth.

Donnelley Financial Solutions Earnings Call Summary

Earnings Call Date:Apr 30, 2025
(Q1-2025)
|
% Change Since: 19.21%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial and operational performance, particularly in software solutions, with significant improvements in adjusted EBITDA margin and strategic share repurchases. However, challenges in capital markets and a decline in Venue sales were notable concerns. The overall sentiment of the call leans positive due to the strong performance and strategic initiatives outweighing the challenges.
Q1-2025 Updates
Positive Updates
Strong First Quarter Results
Donnelley Financial Solutions reported consolidated net sales of $201.1 million, adjusted EBITDA of $68.2 million, and an adjusted EBITDA margin of 33.9% for the first quarter of 2025.
Growth in Software Solutions
Software Solutions net sales grew by approximately 6% on an organic basis, driven by 16% growth in recurring compliance and regulatory-driven products. Software Solutions represented 42.1% of total net sales, an increase of approximately 260 basis points from last year.
Share Repurchase Program
The company repurchased approximately 5% of its outstanding shares, leveraging recent trading prices to be more aggressive in this area.
Adjusted EBITDA Margin Improvement
The adjusted EBITDA margin improved by approximately 680 basis points from the first quarter of 2024, driven by a favorable sales mix and cost control initiatives.
Arc Suite and ActiveDisclosure Growth
Arc Suite posted significant growth, driven by the Tailored Shareholder Reports regulation, while ActiveDisclosure sales grew approximately 11%.
Negative Updates
Decline in Venue Sales
Venue sales declined moderately in the first quarter due to overlapping several large deal rooms from the previous year.
Challenges in Capital Markets
Capital markets transactional revenue remained depressed due to market volatility, macroeconomic headwinds, and heightened uncertainty.
Decrease in Capital Markets Compliance Revenue
Capital markets compliance revenue fell by $7.8 million compared to the first quarter of 2024, partly due to lower print and distribution volume.
Negative Free Cash Flow
The company reported negative free cash flow of $51 million, primarily driven by unfavorable working capital timing and elevated performance-based payments.
Company Guidance
During the first quarter of 2025, Donnelley Financial Solutions reported strong financial performance with net sales of $201.1 million, adjusted EBITDA of $68.2 million, and an adjusted EBITDA margin of 33.9%. The company repurchased approximately 5% of its outstanding shares, capitalizing on favorable trading prices. Software solutions demonstrated notable growth, with year-over-year net sales increasing by around 6% organically, driven by a 16% surge in recurring compliance products like ActiveDisclosure and Arc Suite, despite a decline in the Venue data room product. Notably, software solutions accounted for 42.1% of total net sales in the first quarter, up 260 basis points from the previous year. Despite challenges in the global capital markets, the company maintained profitability, with a trailing four-quarter adjusted EBITDA margin of 29.5%. The company remains focused on transitioning to a software-centric model, aiming for 60% of total net sales from software solutions by 2028, while also benefiting from a robust balance sheet and a net leverage ratio under one.

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
75
Positive
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
70
Positive
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
72
Positive
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
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
779.60M781.90M797.20M833.60M993.30M894.50M
Gross Profit
457.30M484.00M463.90M463.40M580.20M398.50M
EBIT
139.10M136.60M110.00M145.00M219.30M82.80M
EBITDA
206.20M209.70M192.00M212.00M290.50M82.20M
Net Income Common Stockholders
90.10M92.40M82.20M102.50M145.90M-25.90M
Balance SheetCash, Cash Equivalents and Short-Term Investments
16.20M57.30M23.10M34.20M54.50M73.60M
Total Assets
852.80M841.60M806.90M828.30M883.30M865.60M
Total Debt
203.90M141.40M150.60M213.90M181.30M301.30M
Net Debt
187.70M84.10M127.50M179.70M126.80M227.70M
Total Liabilities
432.90M405.50M404.70M498.80M506.30M617.80M
Stockholders Equity
419.90M436.10M402.20M329.50M377.00M247.80M
Cash FlowFree Cash Flow
94.40M105.20M62.20M96.00M137.70M123.10M
Operating Cash Flow
161.30M171.10M124.00M150.20M180.00M154.20M
Investing Cash Flow
-66.80M-53.30M-51.30M-50.90M-45.00M-19.80M
Financing Cash Flow
-121.20M-82.10M-84.60M-121.10M-154.90M-77.50M

Donnelley Financial Solutions Technical Analysis

Technical Analysis Sentiment
Positive
Last Price55.30
Price Trends
50DMA
48.09
Positive
100DMA
52.20
Positive
200DMA
57.87
Negative
Market Momentum
MACD
1.68
Positive
RSI
60.49
Neutral
STOCH
37.64
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DFIN, the sentiment is Positive. The current price of 55.3 is above the 20-day moving average (MA) of 54.38, above the 50-day MA of 48.09, and below the 200-day MA of 57.87, indicating a neutral trend. The MACD of 1.68 indicates Positive momentum. The RSI at 60.49 is Neutral, neither overbought nor oversold. The STOCH value of 37.64 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DFIN.

Donnelley Financial Solutions Risk Analysis

Donnelley Financial Solutions disclosed 32 risk factors in its most recent earnings report. Donnelley Financial Solutions reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 1 New Risks
1.
The Company may be unable to effectuate the termination of its frozen primary defined benefit plan (the "Plan") on favorable terms or at all. Q4, 2024

Donnelley Financial Solutions Peers Comparison

Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
80
Outperform
$30.66B26.5440.36%0.31%26.32%8.63%
XPXP
79
Outperform
$10.27B12.4621.71%<0.01%-2.79%1.33%
PJPJT
75
Outperform
$5.25B26.4396.33%0.67%16.04%60.32%
75
Outperform
$1.51B18.3021.74%-2.79%-8.73%
SFSF
69
Neutral
$9.56B17.7411.48%1.85%12.85%20.21%
MCMC
69
Neutral
$4.59B26.0539.98%4.39%45.14%
64
Neutral
$12.79B9.717.54%16971.00%12.07%-7.53%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
DFIN
Donnelley Financial Solutions
55.30
-4.53
-7.57%
LPLA
LPL Financial
376.23
97.23
34.85%
SF
Stifel Financial
93.35
16.49
21.45%
MC
Moelis
57.00
4.58
8.74%
PJT
PJT Partners
149.13
43.60
41.32%
XP
XP
19.58
1.36
7.46%

Donnelley Financial Solutions Corporate Events

Shareholder MeetingsStock BuybackBusiness Operations and Strategy
Donnelley Financial Solutions Announces New Share Repurchase Program
Positive
May 19, 2025

On May 14, 2025, Donnelley Financial Solutions held its Annual Meeting of Stockholders, where all nominated directors were elected, an advisory resolution on executive compensation was approved, an amendment to the 2016 Performance Incentive Plan was passed, and Deloitte & Touche LLP was ratified as the independent auditor for fiscal year 2025. Following the meeting, on May 15, 2025, the Board authorized a new share repurchase program of up to $150 million, effective through December 31, 2026, replacing the previous program with $15 million remaining. This initiative reflects the company’s strategic approach to managing its capital and enhancing shareholder value.

The most recent analyst rating on (DFIN) stock is a Buy with a $80.00 price target. To see the full list of analyst forecasts on Donnelley Financial Solutions stock, see the DFIN Stock Forecast page.

Executive/Board ChangesPrivate Placements and Financing
Donnelley Financial Solutions Amends Credit Agreement and Appoints New Director
Neutral
Mar 14, 2025

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.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.