Down 10%, Is This Market Share Leader a Buy?
Summary
Last week, Donnelley reported solid second-quarter numbers that revealed a 14.5% jump in adjusted earnings per share to $1.42. Donnelley provides compliance, record-keeping, and legal services to the mergers and acquisitions (M&A), initial public offering (IPO), and capital markets transaction industry. The earnings reported pointed to a substantial reduction in transactions due to the dying special purpose acquisition company (SPAC) boom that Donnelley gladly served in last year. On its earnings webcast, Donnelley management said its pipeline for mergers and IPOs remains full, but deals are being pushed out due to macro uncertainty. Investors should consider that Donnelley benefited from a once-in-a-lifetime SPAC boom, and 2021 earnings per share was the highest as a stand-alone public company.