InnerWorkings (NASDAQ: INWK) and Quad Graphics (NYSE:QUAD) are both small-cap business services companies, but which is the better business? We will contrast the two companies based on the strength of their risk, analyst recommendations, institutional ownership, valuation, profitability, earnings and dividends.

Volatility and Risk

InnerWorkings has a beta of 1.62, meaning that its share price is 62% more volatile than the S&P 500. Comparatively, Quad Graphics has a beta of 1.38, meaning that its share price is 38% more volatile than the S&P 500.

Valuation and Earnings

This table compares InnerWorkings and Quad Graphics’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
InnerWorkings $1.10 billion 0.54 $46.24 million $0.35 31.59
Quad Graphics $4.22 billion 0.27 $474.80 million $1.57 13.92

Quad Graphics has higher revenue and earnings than InnerWorkings. Quad Graphics is trading at a lower price-to-earnings ratio than InnerWorkings, indicating that it is currently the more affordable of the two stocks.

Dividends

Quad Graphics pays an annual dividend of $1.20 per share and has a dividend yield of 5.5%. InnerWorkings does not pay a dividend. Quad Graphics pays out 76.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares InnerWorkings and Quad Graphics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
InnerWorkings 1.76% 8.84% 3.91%
Quad Graphics 1.92% 22.79% 3.97%

Insider & Institutional Ownership

78.8% of InnerWorkings shares are held by institutional investors. Comparatively, 51.7% of Quad Graphics shares are held by institutional investors. 5.3% of InnerWorkings shares are held by insiders. Comparatively, 9.3% of Quad Graphics shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations for InnerWorkings and Quad Graphics, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
InnerWorkings 0 0 2 0 3.00
Quad Graphics 0 0 1 0 3.00

InnerWorkings currently has a consensus target price of $14.00, suggesting a potential upside of 26.64%. Given InnerWorkings’ higher probable upside, analysts plainly believe InnerWorkings is more favorable than Quad Graphics.

Summary

Quad Graphics beats InnerWorkings on 8 of the 15 factors compared between the two stocks.

InnerWorkings Company Profile

InnerWorkings, Inc. is a marketing execution company. The Company’s software applications and databases create an integrated solution that stores, analyzes and tracks the production capabilities of its supplier network, as well as detailed pricing data. The Company’s segments include North America and International. The North America segment includes operations in the United States and Canada. The International segment includes operations in Mexico, South America, Central America, Europe, the Middle East, Africa and Asia. The Company procures products for clients across a range of industries, such as retail, financial services, hospitality, consumer packaged goods, non-profits, healthcare, pharmaceuticals, food and beverage, broadcasting and cable and transportation. The Company’s clients are classified into over two categories, enterprise and transactional. The Company provides marketing materials to its transactional clients on an order-by-order basis.

Quad Graphics Company Profile

Quad/Graphics, Inc. is a marketing services provider. The Company’s segments are United States Print and Related Services, International and Corporate. The United States Print and Related Services segment consists of the Company’s United States printing operations. The United States Print and Related Services segment includes retail inserts, publications, catalogs, special interest publications, journals, direct mail, books, directories, in-store marketing and promotion, packaging, newspapers, custom print products, other commercial and specialty printed products, and global paper procurement. The United States Print and Related Services segment also includes marketing and other complementary services, including marketing strategy and data insights. The International segment consists of the Company’s printing operations in Europe and Latin America, including operations in England, France, Germany and Poland, as well as investments in printing operations in Brazil and India.

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