Trade-Ideas LLC identified

Lexmark International

(

LXK

) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Lexmark International as such a stock due to the following factors:

  • LXK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $18.7 million.
  • LXK has traded 363,925 shares today.
  • LXK is down 3% today.
  • LXK was up 7.6% yesterday.

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More details on LXK:

Lexmark International, Inc., together with its subsidiaries, operates as a developer, manufacturer, and supplier of printing, imaging, device management, managed print services (MPS), document workflow, and business process and content management solutions worldwide. The stock currently has a dividend yield of 4.6%. Currently there are no analysts that rate Lexmark International a buy, 1 analyst rates it a sell, and 1 rates it a hold.

The average volume for Lexmark International has been 720,200 shares per day over the past 30 days. Lexmark International has a market cap of $1.9 billion and is part of the technology sector and computer hardware industry. The stock has a beta of 1.52 and a short float of 3.8% with 3.57 days to cover. Shares are down 18.8% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Lexmark International as a

hold

. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

  • 45.78% is the gross profit margin for LEXMARK INTL INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -1.75% is in-line with the industry average.
  • The revenue fell significantly faster than the industry average of 25.4%. Since the same quarter one year prior, revenues slightly dropped by 5.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • LEXMARK INTL INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, LEXMARK INTL INC reported lower earnings of $1.20 versus $4.10 in the prior year. This year, the market expects an improvement in earnings ($3.46 versus $1.20).
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Computers & Peripherals industry and the overall market, LEXMARK INTL INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Computers & Peripherals industry. The net income has significantly decreased by 143.8% when compared to the same quarter one year ago, falling from $34.70 million to -$15.20 million.

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