tag:blogger.com,1999:blog-6798074091942701235.post4930737243307866221..comments2024-03-29T01:35:09.550-04:00Comments on Can Turtles Fly?: Preliminary look at Lexmark (LXK)Sivaram Vhttp://www.blogger.com/profile/06361276466660862882noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-6798074091942701235.post-39651563755978009952009-08-06T08:32:00.000-04:002009-08-06T08:32:00.000-04:00http://www.barelkarsan.com/2009/05/printing-money-...http://www.barelkarsan.com/2009/05/printing-money-with-lexmark.html<br /><br />you need to look at their pension plan liabilities as well.Guestnoreply@blogger.comtag:blogger.com,1999:blog-6798074091942701235.post-67999452802581555832009-08-01T20:01:28.000-04:002009-08-01T20:01:28.000-04:00Thanks for the mention about CYNO. I took a very q...Thanks for the mention about CYNO. I took a very quick look and it's outside my circle of competence so I'm going to skip it (I usually skip anything to do with healthcare, even cosmetic services like CYNO).<br /><br />But just quickly glancing at CYNO, it's certainly a different type of business. Although LXK may not have a moat, what attracts me is their consistently positive profits and cash flow. Things are declining and maybe the worst is still to come (who knows?) but at least it has a decent record. In contrast, CYNO, like most micrcaps or smallcaps, has been unprofitable in the past and its history is too short.<br /><br />It's hard to tell if CYNO is very cyclical or not. Are the relatively high earnings in 2007 and 2008 a peak, or are they reasonable? The average earnings in the last 5 years is around $6m and that pegs the P/E ratio at 20; or if you use enterprise value and discount for the cash on the books, it's more like a p/e of 6.<br /><br />Some company like LXK may be declining but it does produce $4 billion of sales. In contrast, many micraps like CYNO, depend on higher sales in the future and/or better management of capital.<br /><br />BTW, if you like microcaps, take a look at MGIC. I have been tracking it for months and you may find it worth investigating. I haven't done much research onf MGIC yet so don't take it as a recommendation or anything...Sivaram Velauthapillainoreply@blogger.comtag:blogger.com,1999:blog-6798074091942701235.post-89834789303218645142009-08-01T13:58:26.000-04:002009-08-01T13:58:26.000-04:00There are better opportunities than investing in a...There are better opportunities than investing in a market-lagger in a manufacuturing industry with a commodity-like product. Does Lexmark have any competitive advantage in printing? Strong brand recognition versus HP or Xerox? No and No, it appears.<br /><br />As an alternative, take a look at CYNO. Shares have been battered and were a net-net until this week, company announced 10% buy-back, ramping up international distribution of their product, brand recognition.<br /><br />Trust your gut on Lexmark. There are even better value *traps* than this one.Ross Greenspannoreply@blogger.com