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I have to confess that I've been sitting on the fence for over a year with respect to EBF. In recent months, I've been waiting to see how the merger played out.

As for the stock at current prices, the yield is great. Valuation seems good in terms of P/E and debt/equity ratios, etc. Morningstar rates Ennis as follows: growth = A, profitability = A, financial health = B. The numbers (and letters) look attractive to me in comparison to some other firms in the category like, for example, Multi-Color.

But I'm a bit concerned about growth in the medium term. Last month Morningstar decreased their consensus EPS for Ennis for the current year from 1.71 to 1.67. The gross and net ratios aren't a strong as they once were. It may well be this is just teething pain with the addition of the apparel business. But can they restore the margins?

I'm still exploring a bit on the potential for capital appreciation over the medium term (say 3 years) to go along with that nice dividend payout. Once I have a better feel on this point, then I'm ready to pounce. I guess I'd better not wait too long!


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