Xerox Holdings Corporation (XRX) — Overvalued With Poor Growth Indicators
Xerox shares moved -23.8% over the last 52 weeks, with a high of $20.29 and a low of $11.8. During this time, the stock lagged the S&P 500 index by -18.0%. As of April 2023, the company's 50-day average price is $15.73. Xerox Holdings Corporation, a workplace technology company, designs, develops, and sells document management systems and solutions in the Americas, Europe, the Middle East, Africa, India, and internationally. The mid-cap Technology company has 20,500 full time employees and is based in Norwalk, CT. Xerox has returned a 6.9% dividend yield over the last 12 months.
The Business Is Unprofitable and Its Balance Sheet Is Highly Leveraged:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue | $9,066,000 | $7,022,000 | $7,038,000 | $7,107,000 |
| Gross Margins | 40.3% | 37.4% | 34.1% | 32.6% |
| Operating Margins | 12.6% | 5.8% | 4.6% | 3.0% |
| Net Income | $1,353,000 | $192,000 | -$455,000 | -$322,000 |
| Net Margins | 14.92% | 2.73% | -6.46% | -4.53% |
| Earnings Per Share | $5.8 | $0.84 | -$2.56 | -$2.15 |
| Diluted Shares | 221,969 | 208,983 | 183,168 | 156,958 |
| Free Cash Flow | $1,268,000 | $474,000 | $561,000 | $102,000 |
| Capital Expenditures | -$65,000 | -$74,000 | -$68,000 | -$57,000 |
| Net Current Assets | -$3,099,000 | -$3,148,000 | -$3,855,000 | -$4,073,000 |
| Current Ratio | 1.79 | 2.33 | 1.66 | 1.23 |
| Long Term Debt | $3,233,000 | $4,050,000 | $3,596,000 | $2,866,000 |
| Net Debt / EBITDA | 0.75 | 2.58 | -45.4 | 107.24 |
Xerox has negative earnings for the current period, so its trailing twelve month P/E ratio is not meaningful. But based on its EPS guidance of $1.66, the company has a forward P/E ratio of 8.8. In contrast, the Technology sector's average P/E ratio is 27.16.On the other hand, Xerox is possibly undervalued in terms of its book value because its P/B ratio is 0.7 compared to its sector average of 6.23.
Xerox Has an Average Rating of Sell:
4 analysts are following Xerox and have set target prices ranging from $10.0 to $17.0 per share. On average, they have given the company a rating of underperform. At the current price of $15.73, XRX is trading 18.7% away from its average analyst target price of $13.25 per share, implying an analyst belief that shares are overpriced for the stock. The company has an average amount of shares sold short since 5.8% of the company's shares are tied to short positions. Institutions own 83.4% of Xerox's shares, while the insider ownership rate stands at 5.7%. which is a decent amount of insider shareholders. The company's biggest shareholder is Icahn, Carl, C. with a 19% stake in the company worth $499,810,366.
