Small-Cap Stock Spotlight: Dex One Corp. (DEXO)
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    Stock Alert for Dex One Corp. (DEXO)

    Dex One Corp. (DEXO) is a marketing services company that helps local businesses reach, win and keep ready-to-buy customers.  Through access to a vast collection of highly valuable, proprietary local market intelligence, as well as the personal, hands-on service from its approximately 1,500 dedicated marketing consultants, DEXO helps about 435 K local businesses create custom-tailored marketing programs that effectively reach potential customers – wherever, whenever, and however they search.  DEXO delivers a broad range of products and services to help local businesses grow – from identifying target audiences and developing messaging, to optimizing marketing programs and leveraging appropriate products such as online and mobile search solutions, print yellow pages directories, and voice based search platforms.

    Share Statistics (29-Nov-11)   FY

    2009

    FY

    2010

    %

    Chg

    Q2

    2010

    Q2

    2011

    %

    Chg

    Symbol DEXO Revenue, $Mn 2,202.45 991.26 -55.0% 160.89 377.27 134.5%
    Current price $1.57 Gross marg. 84.1% 74.8% -11.1% 69.4% 80.1% 15.4%
    52wk Range: $0.36-$9.42 Oper. Margin 662.1% -187.6%
    Avg Vol (3m): 673,348 Net margin -293.0% 604.9% -306.5% -478.5% -159.6% -66.6%
    Market Cap. 80.37M              
    Shares Outstanding 50.23M EPS, $ -23.54 33.67 -243.0% -5.39 -1.62 -69.9%

    Source: Reuters.com, SEC Filings.

    Investment Highlights

    DEXO rose 52.43% to close Tuesday at $1.57, continuing gains of the previous two days. It has a 52-week range of $0.36 – $9.42.  Over 9.58 million shares have traded hands during the session, versus the 10-day average volume of 1.47 million.  DEXO is currently trading above its 50-day moving average of $0.78 and above its 200-day moving average of $1.54.

    Shares of DEXO have gained 106.4% in the last five days and 136.2% in the last month.  Year-to-date, the stock is down 65.5%.

    The Cary, NC-based marketing solutions provider earlier this month announced its results for the third quarter, reporting net revenue of $360 million and adjusted EBITDA of $146 million. The Company’s advertising sales came in at $269 million, down 13.7% compared to the year-ago period.

    During the comparable quarter last year, the Company saw adjusted net revenue of $435 million, while adjusted EBITDA was $200 million.

    Commenting in the release, Alfred Mockett, CEO of DEXO, said the Company marginally exceeded third-quarter ad sales guidance despite both the secular pressure on its print products and difficult local business conditions. He added that DEXO is making steady progress towards it goal of returning to growth, albeit more slowly than the Company originally expected.

    “We remain on track to achieve our 2011 cost reduction target,” said newly appointed CFO Gregory W. Freiberg in a statement.  “We also continue to reduce net debt and look for other ways to increase balance sheet flexibility, including obtaining credit agreement amendments to allow us to repurchase debt below par.”

    The Company affirmed its full-year revenue guidance of $1.48 billion to $1.50 billion. Full-year operating loss (midpoint), cash flow from operations (midpoint) and total debt (including fair value discount) are expected to be $420 million, $428 million and $2.54 billion, respectively.

    Source: http://ir.dexone.com/releasedetail.cfm?ReleaseID=620495

    Financial Strength (28-Nov-2011)

    Company

    Industry

    Sector

    S&P 500

    Quick Ratio (MRQ) 1.30 1.14 0.77
    Current Ratio (MRQ) 0.97 1.56 1.39 1.14
    LT Debt to Equity (MRQ) 33,730.67 39.65 59.45 108.74
    Total Debt to Equity (MRQ) 38,880.63 43.00 99.36 146.03
    Interest Coverage (TTM) -2.62 0.50 0.55 26.85

    Source: Reuters.com, SEC Filings.

    Technical Analysis

    Source: http://stockcharts.com

    DEXO is above the upper Bollinger Band, implying that it is currently extended from its recent trend. Be aware, however, that a cross outside of the Bollinger Bands can sometimes be a signal of trend strength and not, necessarily, trend reversal.

    The MACD for DEXO currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above 0, which implies that the underlying moving averages are trending higher.

    Comparative Analysis

    Company Name Ticker Price per Mrkt. Cap. P/E P/S
    Nov29-2011 symbol Share, $ $ Mn 2011 2012 2011 2012
    The McGraw-Hill Companies Inc. MHP 41.09 12.06B 14.42 12.96 1.91 1.84
    Thomson Reuters Corp. TRI 26.22 21.70B 13.11 11.45 1.69 1.64
    SuperMedia Inc. SPMD 2.10 32.52M n/a n/a 0.02 0.02
    Publishing – Periodicals Median       13.33 n/a 0.87 n/a
    Dex One Corp DEXO 1.57 78.87M n/a n/a 0.05 0.06

    Source: Thomson Financial

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