NEW YORK (TheStreet) -- Schawk (SGK) hit a one-year high of $20.34 on Monday after Matthews International (MATW) announced it would acquire the company for an implied price of $20 a share based on Matthews' closing price on Friday, March 14, 2014.
Matthews announced that Schawk's stockholders would receive $11.80 a share and 0.20582 shares of Matthews' common stock for each share of Schawk they hold, which places the value of the deal at approximately $577 million.
Shortly after the announcement, though, multiple law firms announced they had begun investigations into the deal to determine whether Schawk's board of directors failed to adequately shop the company and maximize value for its shareholders.
The stock closed up 35.37% to $19.94, up $5.21 from its previous close of $14.73. It amassed a volume of 946,045, nearly 44 times its average of 21,593. The stock holds a one-year low of $9.38 and hit a low of $19.62 for one day.
TheStreet Ratings team rates SCHAWK INC as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate SCHAWK INC (SGK) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Services & Supplies industry. The net income increased by 259.6% when compared to the same quarter one year prior, rising from -$2.21 million to $3.53 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 6.8%. Since the same quarter one year prior, revenues slightly increased by 4.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- SCHAWK INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, SCHAWK INC swung to a loss, reporting -$0.90 versus $0.79 in the prior year.
- Net operating cash flow has declined marginally to $7.83 million or 9.87% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Commercial Services & Supplies industry and the overall market, SCHAWK INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: SGK Ratings Report