Ennis

Ennis Inc receives a 3-star quantitative star rating, reflecting our opinion that this share class is a balanced choice, but prudent investors should consider looking elsewhere. The stock currently trades at a 6% premium over our quantitative fair value estimate of $21.22 per share; however, this estimate should be taken with a pinch of salt due to its medium uncertainty rating.

The firm's valuation metrics weaken our fair value estimate. A company's valuation metrics provide insights into the market's expectations for its future growth and profitability. Reflecting the firm's valuation is its enterprise value to market value ratio of 0.9, which falls in the bottom 30% globally. The market value of equity makes up a large fraction of enterprise value, indicating that shares have sharply risen, or that the company has a "lazy" balance sheet that is underleveraged. We believe this is a sign that shares could be expensive.

On a different note, the firm's favorable dividend structure is reassuring. Dividends represent a stable form of future cash flows returned to shareholders, reducing the perceived risk of a business. The firm's forward dividend yield of 4.7%, for example, sits in the top 20% globally. Expected dividend payments over the coming year relative to the current share price are favorable, which, despite our unfavorable price/fair value ratio, is a positive attribute.

In addition to the aforementioned drivers, our model considers momentum as part of its comprehensive analysis. This share class has outperformed the broader universe over the past year. This outperformance may signify a bull trap, in light of other detractors from our model.

The company's quantitative economic moat rating of none suggests any excess returns could erode quickly as competition arrives. However, its financial health score is strong, suggesting that the company should be well positioned to weather tough times.