Electronics For Imaging, Inc. (EFII): Should You Sell This Stock After Recent Insider Sales?

Xerox – strengthening its leadership in printing and shifting to services

Xerox has the cheapest valuation. It is trading at around $9 per share with a total market cap of $10.6 billion. The market values Xerox at only 6 times EV/EBITDA. Xerox is the provider of business process and information technology outsourcing support and other solutions.

In February, Xerox Corporation (NYSE:XRX) acquired France-based Impika, strengthening its global leading position in digital color production printing. Impika is the provider of aqueous inkjet pressed products including iPrint, with the printing speed of 375 meters per minute, and I Press, the graphic communications digital press with 2400×1200 dpi resolution. Although Xerox is still expanding its footprint in printing technology, the company is also in the process of shifting its focus to services.

Xerox intends to commit as much as $500 million for acquisitions in the service industry in 2013. Furthermore, the company plans to spend $300 million to pay dividends, $400 million for share repurchases, and an equal amount to pay down its debt.

In the past twelve months, Xerox Corporation (NYSE:XRX) generated the highest operating margin of the trio at 7.6%. However, its return on equity at 10% is less than the 13.7% return on equity of Electronics For Imaging, Inc. (NASDAQ:EFII). Among the three, Ricoh pays the juiciest dividend yield at 5.3%. Xerox ranked second with a 2.7% dividend yield while EFI does not pay a dividend.

My Foolish take

With no dividend payment, a very high valuation, and insider selling, I personally would not like to buy EFI at its current trading price. Xerox and Ricoh seem to be much better picks with decent dividend yields and a much cheaper valuation.

The article Should You Sell This Stock After Recent Insider Sales? originally appeared on Fool.com and is written by Anh Hoang.

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