Document Security Systems, Inc. (NYSEAMERICAN: DSS) is running for the top in the market this morning, trading on gains of around 8% early on. The gains come after the company announced that it has entered into a new multi-year contract that will generate serious revenues. Here’s what’s going on:
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DSS Stock Is Flying on New Multi-Year Contract
In the announcement Document Security Systems announced that its Premier Packaging Corp. subsidiary has entered into a new three-year contract. The contract was signed with one of the world’s largest retailers, but the name of that retailer was undisclosed.
Nonetheless, the contract surrounds the supply of photo mailing envelopes and folding cartons for prints, posters, canvas decors, photo books, passport photos, and business printing. All told, the contract should generate around $6 million in revenue for the DSS subsidiary annually. The company also said that the contract may be renewed on year four.
The company said that the new contract will begin in the third quarter of this year. Finished goods under the contract will be shipped to the company’s more than 9,000 locations. Based on this location count, the customer is likely Walmart, but again, the name of the customer was not disclosed.
Nonetheless, the retailer is expected to open an additional 550 stores over the next year, which could increase the value of the contract. In a statement, Jason Grady, COO at DSS, had the following to offer:
This is a major win for Premier and solidifies our relationship with a long-term customer. The fact that we beat out our competitors for this highly prized contract valued in excess of $24 million is evidence of the strength and capabilities of our printing and packaging division. As we transform DSS into a multinational aggressive growth company, we will continue to pursue new opportunities to land major contracts with national retailers.
Our customer’s commitment to Premier demonstrates that the investments we have made into our business strategy are starting to show. These resources are the foundation and position this division for substantial growth.
This Is Great News
Ultimately, the news issued by DSS is overwhelmingly positive. The fact of the matter is that we’re talking about a company with a market cap of under $30 million. With that said, the new contract announced today will generate revenue in amounts that represents more than 50% of the entire company’s value. That’s hard to ignore. As such, DSS stock is one to watch closely.
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