Lexmark International (LXK) is one of the highest paying dividend stocks we cover. But the purpose of this report is to reveal whether it is also one of the best stocks to buy now. Unfortunately the answer is a clear and resounding no.
Lexmark International (LXK) is a provider of printing and imaging products and software. The company operates in two segments: 1) Imaging Solutions and Services, 2) Perceptive Software.
We can sometimes recommend a company that has had below average (or even negative) sales growth as long as that firm used that period of consolidation to solidify its operations, improve its efficiency and profitability, and lay the groundwork for future growth and prosperity. Unfortunately, LXK fails this litmus test.
Any way you slice it, Lexmark’s performance has been bad. Its growth in profits, cash flows, sales, free cash flows and many other financial metrics over the previous seven – eight years has been practically non-existent or even negative. To make matters worse, Lexmark’s balance sheet is weak in absolute and relative terms.
LXK should be priced like the inferior company that it is. It should be priced at a deep discount to the average stock. Unfortunately for holders of this stock, it is not. Therefore, the potential for this stock to underperform is high. We would not recommend LXK at this point.
Stat Sheet – Lexmark International 4/25/16
|Market Cap||$ 2,372|
|Financial Strength||Below Average|
|Growth Prospects||Below Average|
|Price Volatility||Above Average|
(Our assessment of this firm’s fundamentals will be in effect for the rest of calendar year 2016.)
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