Lexmark Google Insights popularity
I started researching Lexmark and, unlike many companies I have looked at recently, there is nothing that makes me cross it off my list. It's certainly a secondary company with no moat and declining business but I Googled some reviews of their printers and they seem popular. Although the review ratings tend to be lower than HP, one wouldn't invest in this business with the expectation of buying something with the top product.
Anyway, this might sound like shoddy analysis to some but, I took a look at Google Insights to discern Lexmark's popularity. I didn't spend much time thinking about a proper comparison; I just went with a simple comparison of a search for "lexmark" versus "printer". I tried looking at competitors like "hp" and "canon" but the problem is that these are diversified companies offering many different products. One can't really compare their popularity to a printer-only company like Lexmark. This problem is also present when looking at competitor financials—who knows how profitable their printer operations are.
I downloaded the data from Google Insights, which tracks data since 2004, and plotted them. I looked at popularity of "lexmark" vs "printer"; and searches for "lexmark cartridge" and "lexmark ink". One set of charts covers the US web users and the other is for the whole world. I wanted to look at Europe, which is Lexmark's major foreign market, but Google Insights didn't have a net region (it only had countries like Germany, Britain, etc).
World Popularity
I have no idea how Google indexes these counts but it appears that "printer" popularity has been declining since 2004. This either means that the whole industry is losing importance with customers or customers are using some new keyword or concept to refer to printers (for instance, most printers are multi-function printers or MFPs so maybe it's not called printers anymore.)
Lexmark has been trending down, in a similar manner as "printer".
I felt the ratio is more insightful and that is plotted as the line. Lexmark to printer ratio is around 35% now and has historically been around 40%. I don't think this absolute number means anything; all we can look at is the trend. Lately the trend has been down for Lexmark and that is not a good sign.
US Popularity
The US market is Lexmark's main market and the ratio seems stable. We don't see the decline that was obvious in the world market.
Lexmark Ink Popularity - World
Printer companies make their living off cartridges and ink sales. They often sell printers at a loss while making a profit on the ink.
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It appears Lexmark's cartridge and ink searches have been declining over the years. "Cartridge" has weakened considerably while "ink" is somewhat more stable.
Lexmark Ink Popularity - USA
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Cartridge seems to be declining a lot while ink is farily strong in the US market.
You can also see seasonal effects. For instance, note how sales pick up in the latter part of the year and drops off in the middle, during summer—you'll see a dip in the middle of each year. School sales and Christmas sales probably account for this trend.
Conclusion
Using Google Insights, it appears that Lexmark is weakening in the global market. Its popularity in the US market seems stable. Overall, there is nothing to indicate, at least from this analysis, that Lexmark has fallen off a cliff (as its financials and stock price chart would imply.) The declining ink and cartridge popularity is more of a concern.
(NOTE: I have no idea how reliable any of this analysis is. I read some articles suggesting that you can derive useful information from Google data but it's not easy.)
Anyway, this might sound like shoddy analysis to some but, I took a look at Google Insights to discern Lexmark's popularity. I didn't spend much time thinking about a proper comparison; I just went with a simple comparison of a search for "lexmark" versus "printer". I tried looking at competitors like "hp" and "canon" but the problem is that these are diversified companies offering many different products. One can't really compare their popularity to a printer-only company like Lexmark. This problem is also present when looking at competitor financials—who knows how profitable their printer operations are.
I downloaded the data from Google Insights, which tracks data since 2004, and plotted them. I looked at popularity of "lexmark" vs "printer"; and searches for "lexmark cartridge" and "lexmark ink". One set of charts covers the US web users and the other is for the whole world. I wanted to look at Europe, which is Lexmark's major foreign market, but Google Insights didn't have a net region (it only had countries like Germany, Britain, etc).
World Popularity
I have no idea how Google indexes these counts but it appears that "printer" popularity has been declining since 2004. This either means that the whole industry is losing importance with customers or customers are using some new keyword or concept to refer to printers (for instance, most printers are multi-function printers or MFPs so maybe it's not called printers anymore.)
Lexmark has been trending down, in a similar manner as "printer".
I felt the ratio is more insightful and that is plotted as the line. Lexmark to printer ratio is around 35% now and has historically been around 40%. I don't think this absolute number means anything; all we can look at is the trend. Lately the trend has been down for Lexmark and that is not a good sign.
US Popularity
The US market is Lexmark's main market and the ratio seems stable. We don't see the decline that was obvious in the world market.
Lexmark Ink Popularity - World
Printer companies make their living off cartridges and ink sales. They often sell printers at a loss while making a profit on the ink.
.png)
It appears Lexmark's cartridge and ink searches have been declining over the years. "Cartridge" has weakened considerably while "ink" is somewhat more stable.
Lexmark Ink Popularity - USA
.png)
Cartridge seems to be declining a lot while ink is farily strong in the US market.
You can also see seasonal effects. For instance, note how sales pick up in the latter part of the year and drops off in the middle, during summer—you'll see a dip in the middle of each year. School sales and Christmas sales probably account for this trend.
Conclusion
Using Google Insights, it appears that Lexmark is weakening in the global market. Its popularity in the US market seems stable. Overall, there is nothing to indicate, at least from this analysis, that Lexmark has fallen off a cliff (as its financials and stock price chart would imply.) The declining ink and cartridge popularity is more of a concern.
(NOTE: I have no idea how reliable any of this analysis is. I read some articles suggesting that you can derive useful information from Google data but it's not easy.)
Like some businesses, we buy printers based on ink and cartridge costs and printer price is secondary. After the initial printer purchase, with the half full cartridge, we use refill services and not the printer's manufacturer. The better printers are becoming more expensive for this reason, but we wish the manufacturers would get with the replacement cartridge program or get out of this business altogether.
ReplyDeleteThat's an important point about using 3rd party refill services. Thanks for bringing it up. I have to do more research and figure out who supplies those third parties...
ReplyDeleteI like the idea of using Google to analise Lexmark.
ReplyDeleteI also like the company but it looks like the market is ignoring it completely with the price only recently rising from its 52 week and all time lows.
The refill market has been hanging over the company for the last few years so I think its all priced in. Maybe there is more cartridge filling now the same as people opting for no-name brands.
They have been buying back a substantial number of shares and the company still is basically debt free.
Why the share price has not been increasign with the market baffles me.
There is a good reason the market is marking down Lexmark. I agree wtih you that it likely isn't the refill issue and that is probably priced in.
ReplyDeleteTheir problem is that they lost their moat, however small it used to be, and they have seen continuously falling sales. Their sales this year can fall as much as 20% and that is pretty severe. If you look at their multi-year financials, you'll see their sales declining, while their margins and ROE also seem to be under serious threat.
Lexmark used to a be growth stock (its p/e was 15 to 20 over the last decade) but is not anymore. Until it stabilizes its sales, it is a risky proposition.