STATE OF THE INDUSTRY - Far from Dead

Commercial printing is price competitive—all fragmented industries tend to be. Its private companies, however, tend to have gross margins in the 25 percent to 30+ percent range and EBITDA margins in the 15+ percent range.

Consolidated Graphics owns 65 commercial printing plants, and regularly reports EBITDA margins of 15 percent and gross margins of 30 percent. Although Consolidated has missed its earnings consensus three times, it has been by less than 15 percent of the Street's expectation, and it continues to report good earnings and a healthy balance sheet. Its stock price is more a manifestation of the pain inflicted by Wall Street nowadays when any company fails to meet earnings expectations than of the condition of the commercial printing industry.