Lexmark International Beats on Both Top and Bottom Lines

Lexmark International (NYS: LXK) reported earnings on July 23. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended June 30 (Q2), Lexmark International beat expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue contracted. Non-GAAP earnings per share grew. GAAP earnings per share increased significantly.

Gross margins dropped, operating margins shrank, net margins grew.

Revenue details
Lexmark International reported revenue of $886.7 million. The nine analysts polled by S&P Capital IQ hoped for a top line of $857.3 million on the same basis. GAAP reported sales were the same as the prior-year quarter's.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.95. The 12 earnings estimates compiled by S&P Capital IQ predicted $0.87 per share. Non-GAAP EPS of $0.95 for Q2 were 6.7% higher than the prior-year quarter's $0.89 per share. GAAP EPS of $1.39 for Q2 were 153% higher than the prior-year quarter's $0.55 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 39.0%, 60 basis points worse than the prior-year quarter. Operating margin was 6.9%, 170 basis points worse than the prior-year quarter. Net margin was 10.0%, 570 basis points better than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $849.7 million. On the bottom line, the average EPS estimate is $0.95.

Next year's average estimate for revenue is $3.49 billion. The average EPS estimate is $3.82.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 142 members out of 227 rating the stock outperform, and 85 members rating it underperform. Among 77 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 54 give Lexmark International a green thumbs-up, and 23 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Lexmark International is underperform, with an average price target of $22.63.

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