We can also compare Lexmark International Inc (NYSE:LXK) to Intel Corporation (NASDAQ:INTC), a larger company which is also working on the transition from hardware to software and services, and to Sony Corporation (ADR) (NYSE:SNE), which is primarily a manufacturer of electronic equipment. The dividend yield at Intel Corporation (NASDAQ:INTC) is about 4%- lower than at Lexmark, but still of interest from the perspective of an income investor. Like HP, Intel has been experiencing declining earnings but the market has reacted accordingly and currently both the trailing and forward P/Es are 12. Sony Corporation (ADR) (NYSE:SNE)actually had its revenue increase by 7% in its last quarterly report compared to a year ago, but with analyst expectations of 35 cents in EPS for this fiscal year (which ends in March 2014) the stock is expensive enough that we would avoid it.
Canon doesn’t look too appealing either, and Intel would have to be at least stabilizing its business for us to consider it at these levels (it might be a good stock to watch for future developments). We are interested in taking a closer look at HP in value terms, though we’d have to be convinced that earnings won’t continue to decline at current rates. A similar logic holds for Lexmark- the business is not doing great, but the stock price is cheap enough to make it worth further research- and certainly the high yield is intriguing as well.
Disclosure: I own no shares of any stocks mentioned in this article.