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Wednesday, October 25, 2006

Lexmark A Continuing Member of Slow Growth Club

By William Trent, CFA of Stock Market Beat

Printer manufacturer Lexmark (LXK) joined retained its membership in the Slow-Growing Technology Company Club after posting a measly 1.6% year/year growth rate for third-quarter revenues. Like its slow-growing document management counterpart Xerox (XRX) the company talked about all sorts of areas in which it is doing well - but that unfortunately don’t add up to much overall.Inventories were up more than 13% since the beginning of the year, but to be fair there is likely some degree of seasonality and the decline in receivables more than offset inventory growth from a total working-capital management perspective.

But until they can grow at least as fast as the overall economy it’s hard to see how this deserves a market multiple. The author may hold a position in the securities discussed.

A current list of the author's holdings is available here.

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