Lexmark International Inc (LXK), Hewlett-Packard Company (HPQ): Keep Your Money Away From 2D Printing

Xerox is also challenged by weakening sales

Xerox offers a slew of service, most of which focus on printers and printing material. I see the company as being the best of these three, but like the others it is facing revenue regression. However, the company is battling hard, and it may be able to turn things around by focusing on more than just the standard black-and-white printing technology. Color technology is an important market, and the firm is able to attain higher revenue per page by focusing in that area.

That attention would help return on equity, and ensure a competitive advantage for the firm. Currently, Xerox has an asset turnover of 73.3 times, which is in line with the industry. The company also meets the industry standard for profit margin, at 4.89%. But, for now, operating at par isn’t enough to beat the Tiger Woods’ of the tech firms.

Is this sector best avoided?

In short, yes. All three of these companies are suffering from an industry with extremely low costs for printers. In fact, in many cases, printers are less expensive than the ink used to fill them. These firms are faced with a further burden due to the fact that ink is much cheaper to purchase online. So as costs to keep products current rises with the amount of competition in the market, the revenue-generating potential of those expenses is falling fast.

The article Keep Your Money Away From 2D Printing originally appeared on Fool.com and is written by Phillip Woolgar.

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