HP (NYSE: HPQ) and Lexmark International (NYSE:LXK) are both computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitabiliy, dividends, earnings, risk, valuation, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a summary of current ratings and price targets for HP and Lexmark International, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HP 0 8 12 0 2.60
Lexmark International 0 0 0 0 N/A

HP presently has a consensus price target of $19.78, indicating a potential upside of 3.16%. Given HP’s higher possible upside, analysts clearly believe HP is more favorable than Lexmark International.

Profitability

This table compares HP and Lexmark International’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
HP 4.94% -68.86% 9.80%
Lexmark International 2.17% 7.30% 2.01%

Dividends

HP pays an annual dividend of $0.53 per share and has a dividend yield of 2.8%. Lexmark International pays an annual dividend of $1.44 per share and has a dividend yield of 3.6%. HP pays out 37.3% of its earnings in the form of a dividend. Lexmark International pays out -133.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. HP has increased its dividend for 6 consecutive years. Lexmark International is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

HP has a beta of 1.89, indicating that its stock price is 89% more volatile than the S&P 500. Comparatively, Lexmark International has a beta of 1.5, indicating that its stock price is 50% more volatile than the S&P 500.

Institutional & Insider Ownership

79.6% of HP shares are owned by institutional investors. Comparatively, 81.8% of Lexmark International shares are owned by institutional investors. 0.6% of HP shares are owned by insiders. Comparatively, 2.8% of Lexmark International shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares HP and Lexmark International’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
HP $49.47 billion 0.65 $4.30 billion $1.42 13.50
Lexmark International N/A N/A N/A ($1.08) -37.49

HP has higher revenue and earnings than Lexmark International. Lexmark International is trading at a lower price-to-earnings ratio than HP, indicating that it is currently the more affordable of the two stocks.

Summary

HP beats Lexmark International on 8 of the 13 factors compared between the two stocks.

About HP

HP Inc. is a provider of products, technologies, software, solutions and services to individual consumers, small- and medium-sized businesses, and enterprises, including customers in the government, health and education sectors. The Company provides personal computing and other access devices, imaging and printing products, and related technologies, solutions and services. Its segments include Personal Systems, Printing and Corporate Investments. The Personal Systems segment provides Commercial personal computers (PCs), Consumer PCs, workstations, thin clients, Commercial tablets and mobility devices, retail point-of-sale systems, displays and other accessories, software, support and services for the commercial and consumer markets. The Printing segment provides consumer and commercial printer hardware, supplies, media, solutions and services, as well as scanning devices. The Corporate Investments segment includes the operations of HP Labs and certain business incubation projects.

About Lexmark International

Lexmark International, Inc. is a United States-based company, which is a provider of printing and imaging products, software, solutions and services. The Company’s software scans everything from spreadsheets to medical images, and provides services to banking, healthcare, insurance and retail companies. It creates enterprise software, hardware and services that remove inefficiencies of information silos and disconnected processes. It offers various services, such as managed print services, hardware warranty and repair service, professional services and enterprise software services. It offers solutions, such as financial process automation, business process management, Web information integration and consumer loan origination. Its hardware category includes equipment collection program, and Smart multifunction product (MFP) includes device management and mobile print solutions. It produces and distributes millions of supplies each year, including ink, toner and paper.

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