Why Lexmark International (LXK) Is Up Today

NEW YORK (TheStreet) -- Lexmark International  (LXK) was rising 7.6% to $37.58 on Tuesday after the printer maker announced better-than-expected quarterly results thanks to higher revenues from its managed print services and software sectors.

Lexmark's revenue from managed print services, which lets companies outsource their printing jobs to another service provider, rose 22% in the quarter that ended on Dec. 31, while revenue from the perceptive software business, which creates scanning software, jumped 70% to $72 million. Total revenue rose 4% to $1.01 billion, while net income rose to $94 million, or $1.48 a share, from $26.3 million, or 40 cents a share, from the same period one year earlier.

Lexmark earned $1.18 per share, excluding items, while analysts had expected an EPS of $1.09 on revenue of $929.5 million.

The printer maker also projected first-quarter adjusted earnings of 80 to 90 cents a share, along with a revenue decrease of 3% to 5% because of the company's departure from the inkjet printer business. Analysts polled by Thomson Reuters I/B/E/S expected earnings of 85 cents per share.

TheStreet Ratings team rates LEXMARK INTL INC as a "buy" with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate LEXMARK INTL INC (LXK) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, good cash flow from operations, solid stock price performance, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company has increased its net income during the last reported quarter when compared with the same quarter a year earlier. However, since the company had zero dollars in net income for the prior period, we are unable to calculate a percent change in order to compare its growth rate with that of its industry average.
  • Net operating cash flow has slightly increased to $142.80 million or 6.96% when compared to the same quarter last year. In addition, LEXMARK INTL INC has also modestly surpassed the industry average cash flow growth rate of 6.57%.
  • This stock has managed to rise its share value by 27.50% over the past twelve months. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • LEXMARK INTL INC has shown improvement in its earnings for its most recently reported quarter when compared with the same quarter a year earlier. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, LEXMARK INTL INC reported lower earnings of $1.49 versus $4.11 in the prior year. This year, the market expects an improvement in earnings ($3.90 versus $1.49).
  • You can view the full analysis from the report here: LXK Ratings Report

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