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Lexmark (LXK) Q3 Earnings: Is a Disappointment in Store?
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Lexmark International Inc. is expected to report third-quarter 2016 results on Oct 25. Last quarter, the company posted a negative earnings surprise of 15.85%. Let's see how things are shaping up for this announcement.
Factors to Consider
Lexmark’s second-quarter results were not very encouraging given the earnings miss. Also, both earnings and revenues decreased on a year-over-year basis, primarily due to a strong U.S. dollar, a decline in non-MPS revenues, and the ongoing exit of the company from the Inkjet business.
Recently, Lexmark revealed in an SEC filing that the Committee on Foreign Investment in the United States (CFIUS) has approved its proposed buyout by a Chinese consortium. Per the filing, the CFIUS found no unresolved national security issues related with the acquisition and thus gave the green signal. However, it has asked the parties acquiring Lexmark to sign a national security agreement with the U.S. Department of Defense and Department of Homeland Security.
In April this year, Lexmark agreed to be acquired by a Chinese consortium led by Apex Technology Co., Ltd. (Apex) and PAG Asia Capital (PAG). Legend Capital Management Co., Ltd. (Legend Capital) was also one of the buyers. Per the agreement, the consortium will acquire Lexmark for $3.6 billion or $40.50 per share in cash.
In our opinion, the deal will be beneficial for Lexmark as it has been struggling amid changing industry dynamics.
Although Lexmark has a strong market position, reduced demand for traditional printing hardware and overall macroeconomic uncertainties have been concerns.
Synergies from the acquisitions of Kofax and Readsoft and renewed focus on the software space however could set it back on the growth path. Moreover, the Inkjet exit, software prospects and the MPS approach are positives that will drive shares in the to-be-reported quarter.
Competition from players like Canon Inc., Xerox Corp. and HP Inc. (HPQ - Free Report) are additional concerns.
Lexmark has a Zacks Rank #5 (Strong Sell). We caution against stocks with a Zacks Rank #4 (Sell) or 5 going into the earnings announcement, especially when the company is seeing negative estimate revisions.
The following stocks in the technology sector are likely to beat earnings this season. That is because, as per our proven model, a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen:
HubSpot, Inc. (HUBS - Free Report) with Earnings ESP of +13.89% and a Zacks Rank #3
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Lexmark (LXK) Q3 Earnings: Is a Disappointment in Store?
Lexmark International Inc. is expected to report third-quarter 2016 results on Oct 25. Last quarter, the company posted a negative earnings surprise of 15.85%. Let's see how things are shaping up for this announcement.
Factors to Consider
Lexmark’s second-quarter results were not very encouraging given the earnings miss. Also, both earnings and revenues decreased on a year-over-year basis, primarily due to a strong U.S. dollar, a decline in non-MPS revenues, and the ongoing exit of the company from the Inkjet business.
Recently, Lexmark revealed in an SEC filing that the Committee on Foreign Investment in the United States (CFIUS) has approved its proposed buyout by a Chinese consortium. Per the filing, the CFIUS found no unresolved national security issues related with the acquisition and thus gave the green signal. However, it has asked the parties acquiring Lexmark to sign a national security agreement with the U.S. Department of Defense and Department of Homeland Security.
In April this year, Lexmark agreed to be acquired by a Chinese consortium led by Apex Technology Co., Ltd. (Apex) and PAG Asia Capital (PAG). Legend Capital Management Co., Ltd. (Legend Capital) was also one of the buyers. Per the agreement, the consortium will acquire Lexmark for $3.6 billion or $40.50 per share in cash.
In our opinion, the deal will be beneficial for Lexmark as it has been struggling amid changing industry dynamics.
Although Lexmark has a strong market position, reduced demand for traditional printing hardware and overall macroeconomic uncertainties have been concerns.
Synergies from the acquisitions of Kofax and Readsoft and renewed focus on the software space however could set it back on the growth path. Moreover, the Inkjet exit, software prospects and the MPS approach are positives that will drive shares in the to-be-reported quarter.
Competition from players like Canon Inc., Xerox Corp. and HP Inc. (HPQ - Free Report) are additional concerns.
Lexmark has a Zacks Rank #5 (Strong Sell). We caution against stocks with a Zacks Rank #4 (Sell) or 5 going into the earnings announcement, especially when the company is seeing negative estimate revisions.
LEXMARK INTL Price and EPS Surprise
LEXMARK INTL Price and EPS Surprise | LEXMARK INTL Quote
Stocks to Consider
The following stocks in the technology sector are likely to beat earnings this season. That is because, as per our proven model, a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen:
Amazon.com, Inc. (AMZN - Free Report) with Earnings ESP of +10.47% and a Zacks Rank #1 You can see the complete list of today’s Zacks #1 Rank stocks here
HubSpot, Inc. (HUBS - Free Report) with Earnings ESP of +13.89% and a Zacks Rank #3
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>