4/23/2013

Why Lexmark Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Lexmark (NYSE: LXK  ) have popped today by greater than 17% following the company's first-quarter earnings release.

So what: Revenue in the quarter came in at the high end of guidance at $884 million, topping the consensus estimate of $873.6 million. The same is true for Lexmark's non-GAAP earnings per share of $0.88, which was more than the $0.87 per share adjusted profit that investors were expecting. CEO Paul Rooke said Lexmark continues to transition from a hardware-centric model to a solutions-centric approach, which is underscored by the recent acquisitions of two software companies and the sale of the inkjet business.

Now what: Lexmark said it's sticking by its capital allocation policy of returning over 50% of free cash flow to investors on average. In the first quarter, the company paid $19 million in dividends, or $0.30 per share, and repurchased $21 million in shares. The current share repurchase authorization has $230 million remaining. Not everyone was impressed, as Barclays subsequently downgraded shares from "equalweight" to "underweight."

Interested in more info on Lexmark? Add it to your watchlist by clicking here.

It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.

No comments:

Post a Comment