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

    Dex One Corp. (DEXO) is a marketing solutions provider helping local businesses and their customers connect wherever and whenever they choose to search. Building on its heritage of delivering print-based solutions, the Company provides integrated products and services to help its clients establish their digital presence and generate leads. DEXO’s locally based marketing experts offer a broad network of local marketing solutions including online, mobile and print search solutions, such as DexKnows.com.

    Share Statistics (01-Mar-11) FY2009 FY2010 % Chg Q32010 Q32011 % Chg
    Symbol DEXO Revenue, $Mn 2,202.45 991.26 -55.0% 259.23 360.10 38.9%
    Current price $1.80 Gross marg. 84.1% 74.8% -11.1% 75.0% 80.2% 6.9%
    52wk Range: $0.36-$5.58 Oper. margin 662.1% 21.7%
    Avg Vol (3m): 1,458,130 Net margin -293.0% 604.9% -306.5% -150.7% 6.2% -104.1%
    Market Cap. 90.42M
    Shares Outstanding 50.23M EPS, $ -23.54 33.67 -243.0% -2.75 0.53 -119.3%

    Source: Reuters.com, SEC Filings.

    Investment Highlights

    Shares of Dex One Corp. (DEXO) traded higher Thursday after the Company posted its results posted its latest financial results, showing figures that were in line with its expectations.  DEXO added 2.86% to close at $1.80, on strong volume of over 4.10 million shares.

    Shares of the marketing solutions company have risen 16.9% in the last five days and 4.1% in the last month.  Year-to-date, the stock is down 62.1%.

    The Cary, N.C.-based Company posted fourth quarter net income of $5.5 million, or $0.11 cents per share, reversing the year-ago net loss of $20.2 million.  Net revenue came in at $352 million, compared to nearly $358 million reported in the comparable period of last year.

    As stated by Alfred Mockett, CEO of DEXO, 2011 was marked by significant progress executing its strategy and delivering on financial commitments.

    “Our competitive position was strengthened by improving our sales channels, extending the product portfolio and making our services easy to sell and easy to buy,” Mockett said.  “As a result, we generated fourth quarter digital growth of more than 30 percent, which exceeded the average for our peer group. In addition, bundles continue to perform well, increasing the average spending among recurring customers as well as attracting new customers.”

    For the full year 2011, DEXO posted net revenue of $1.48 billion, down 17% from last year’s result, consistent with the Company’s expectation.

    The Company reported $629 million of EBITDA for the year, representing a 42% margin. After deducting full-year cash interest of $204 million, CapEx of $28 million, cash taxes of $11 million and $1 million for use of working capital, DEXO generated $385 million of free cash flow, representing a cash flow conversion of over 60%. The results were inline with the Company’s expectations for the year.

    Looking forward, the Company expects operating income and cash flow from operations to reach $280 million and $360 million, respectively, this year.

    “Due to the larger concentration of major metro markets in the period and softer than expected selling conditions in the Western U.S., first quarter sales performance will be slightly weaker compared to the fourth quarter of 2011,” commented Mockett.  “We expect performance to improve as we continue to grow digital and bundle sales throughout 2012.”

    Also yesterday, DEXO announced that it is pursuing amendments to its credit agreements to enable the repurchase of outstanding loans below par.  The Company expects the amendments to become effective upon approval by a majority of the Company’s three lender groups, which it expects to obtain by the end of next week.

    Source:

    http://ir.dexone.com/releasedetail.cfm?ReleaseID=653037

    Financial Strength (01-Mar-12)

    Company

    Industry

    Sector

    S&P 500

    Quick Ratio (MRQ) 1.05 1.07 0.65
    Current Ratio (MRQ) 0.97 1.24 1.30 1.00
    LT Debt to Equity (MRQ) 33,730.67 33.48 55.20 171.80
    Total Debt to Equity (MRQ) 38,880.63 38.03 95.52 224.97
    Interest Coverage (TTM) -2.62 0.50 0.30 26.

    Source: Reuters.com, SEC Filings.

    Technical Analysis

     

    Source: http://stockcharts.com

    Comparative Analysis

    Company Name Ticker Price per Mrkt. Cap. P/E P/S
    Mar01-2011 symbol Share, $ $ Mn 2011 2012 2011 2012
    Thomson Reuters Corp. TRI 28.90 23.93B 14.24 13.38 1.83 1.78
    The McGraw-Hill Companies Inc. MHP 46.56 12.94B 14.11 12.76 1.99 1.90
    SuperMedia Inc. SPMD 2.97 45.94M n/a n/a 0.03 n/a
    Publishing – Periodicals Median       15.49 n/a 1.14 n/a
    Dex One Corp. DEXO 1.80 90.42M n/a n/a 0.06 0.06

    Source: Thomson Financial

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