Cimpress plc CMPR has failed to impress investors with its recent operational performance due to rising costs. High debt levels and forex woes are other concerns for the company.

Cimpress is an online supplier of high-quality graphic design services and customized printed products to small businesses and consumers. Its product offerings include business cards, brochures and websites, and e-commerce platforms, calendars, address labels, note pads and signage, among others.

In the past year, this Zacks Rank #5 (Strong Sell) company’s shares have lost 41.3% compared with the industry’s 11.1% decline.

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Let’s discuss the factors that are likely to continue taking a toll on this company.

Increasing Costs: The company has been witnessing the impacts of high operating expenses over time. In fiscal 2024 (ended June 2024), its cost of revenues increased 3.3% due to rising costs for product substrates like paper, production materials like aluminum plates, freight and shipping charges, and energy costs. In the second quarter of fiscal 2025 (ended Dec. 31, 2024), the cost of revenues increased 5.6% on a year-over-year basis due to rising production and shipping costs. 

General and administrative expenses rose 16.7% year over year in the fiscal second quarter due to higher long-term incentive compensation and cash compensation costs. The company is persistently bearing the brunt of input cost inflation. Escalation in costs, if not controlled, can severely affect margins and profitability in the quarters ahead.

High Debt Level: High debt levels are likely to weigh on Cimpress. Exiting the second quarter of fiscal 2025, the metric was high at $1.6 billion. Considering its high debt profile, its cash and cash equivalents of $224.4 million do not seem impressive.

Forex Woes: CMPR’s international presence keeps it exposed to the risk of adverse currency fluctuations. This is because a strengthening U.S. dollar is likely to require the company to either raise prices or contract profit margins in locations outside the United States. Thus, adverse currency movements are a worry.

Stocks to Consider

Some better-ranked companies are discussed below.

RBC Bearings Incorporated RBC currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank ( Strong Buy) stocks here.

RBC delivered a trailing four-quarter average earnings surprise of 4.9%. In the past 60 days, the Zacks Consensus Estimate for RBC’s fiscal 2025 earnings has increased 1.3%.

Allegion plc ALLE presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 9.9%.

In the past 60 days, the consensus estimate for ALLE’s 2025 earnings has increased 1.6%.

The Middleby Corporation MIDD presently carries a Zacks Rank of 2. MIDD delivered a trailing four-quarter average earnings surprise of 1.9%.

In the past 60 days, the consensus estimate for MIDD’s 2025 earnings has inched up 1.8%.

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Cimpress plc (CMPR) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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