Lexmark International (LXK) recently saw revenue grow 10% in the first quarter. The company is an attractive value stock with a forward P/E of 9.6.
Lexmark manufactures laser printers, inkjet printers and multifunction imaging and printing devices for the home and office. Its products are sold in more than 150 countries worldwide.
Lexmark Surprised by 52% in the First Quarter
When I last reviewed Lexmark in October 2009, it had just surprised on the third quarter of 2009 and had seen quarter over quarter revenue growth which it expected to continue.
On Apr 27, the company reported revenue jumped 10% in the first quarter to $1.04 billion from a year ago but declined 3% from the fourth quarter of 2009. The Printing Solutions and Services Division boosted the quarter as revenue grew by 20% to $717 million. Imaging Solutions Division fell 6% to $326 million.
The company beat the Zacks Consensus Estimate by 46 cents. Earnings per share were $1.35 compared to the consensus of 89 cents. The company reported 89 cents a year ago.
Outlook for the Second Quarter
Lexmark saw improved market conditions in the first quarter and is optimistic going forward.
For the second quarter, it expects revenue to be in the mid to high single digit percentage range compared to a year ago. Earnings per share are projected to be between 85 to 95 cents.
The Zacks Consensus Estimate jumped on the quarterly results, climbing 23 cents to 97 cents in the last month, which is slightly higher than the company’s projection range.
For the year, the Zacks Consensus Estimate soared 21.8% to $4.02 from $3.30 in the last 30 days. This is earnings growth of 23% for 2010.
Lexmark is a Zacks #1 Rank (strong buy) stock.
Value Fundamentals
Lexmark has several value characteristics including a low P/E ratio and a price-to-book ratio of 2.7 which is below the 3.0 value parameter.
The company also has a 1-year trailing return on equity (ROE) of 29% which is well above the industry average of 7%.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service.
