Lexmark Shares Popped: What You Need to Know

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: Lexmark (NYSE: LXK  ) popped 21% in intraday trading today after the company printed better-than-expected quarterly results.

So what: Non-GAAP EPS of $1.36 trounced the $1.03 consensus estimate and rose 11% year-over-year. Revenue rose a more modest 1% to $1.04 billion, ahead of the consensus forecast of $1.01 billion.

Now what: The printer business is a razor and blade model in which the printer is the razor and the ink or toner is the blade. Lexmark is preparing to exit the less-profitable low-end inkjet market. During the quarter, revenue growth in strategic focus areas was more than 25% for managed print services and in the double-digits for core supplies (like ink and toner). Management guided GAAP EPS for the current quarter to $0.94 to $1.04, straddling the consensus estimate of $0.99. At a P/E ratio of less than seven times, this stock just might print big wins for shareholders.

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

Fool contributor Cindy Johnson does not own shares of any company named above. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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