Why Are People Talking About Investing in Xerox (XRX)?

Xerox logged a -0.7% change during today's afternoon session, and is now trading at a price of $15.1 per share.

Xerox returned losses of -17.2% last year, with its stock price reaching a high of $19.4 and a low of $11.8. Over the same period, the stock underperformed the S&P 500 index by -13.0%. As of April 2023, the company's 50-day average price was $15.26. 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. Based in Norwalk, CT, the mid-cap Technology company has 20,500 full time employees. Xerox has offered a 6.6% dividend yield over the last 12 months.

The Company's Revenues Are Declining:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $9,066 $7,022 $7,038 $7,107
Gross Margins 40.3% 37.4% 34.1% 32.6%
Operating Margins 12.6% 5.8% 4.6% 3.0%
Net Margins 14.92% 2.73% -6.46% -4.53%
Net Income (MM) $1,353 $192 -$455 -$322
Net Interest Income -$89,000 -$80,000 -$92,000 -$80,000
Depreciation & Amort. -$430,000 -$368,000 -$327,000 -$270,000
Earnings Per Share $5.8 $0.84 -$2.56 -$1.32
EPS Growth n/a -85.52% -404.76% 48.44%
Diluted Shares (MM) 222 209 183 157
Free Cash Flow (MM) $1,268 $474 $561 $102
Capital Expenditures (MM) -$65 -$74 -$68 -$57
Net Current Assets (MM) -$3,099 -$3,148 -$3,855 -$4,073
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 does not have a meaningful trailing P/E ratio since its earnings per share are currently in the red. Based on its EPS guidance of $1.71, the company has a forward P/E ratio of 8.9. In comparison, the average P/E ratio for the Technology sector is 27.16. On the other hand, the market is undervaluing Xerox in terms of its equity because its P/B ratio is 0.69. In comparison, the sector average is 6.23. In conclusion, Xerox's impressive cash flow trend, decent P/B ratio, and reasonable use of leverage demonstrate that the company may still be fairly valued — despite its elevated earnings multiple.

Analysts Give Xerox an Average Rating of Sell:

The 4 analysts following Xerox have set target prices ranging from $9.0 to $17.0 per share, for an average of $13.5 with a underperform rating. As of April 2023, the company is trading 13.0% away from its average target price, indicating that there is an analyst belief that shares are overpriced.

Xerox has an average amount of shares sold short because 6.8% of the company's shares are sold short. Institutions own 83.4% of the company's shares, and the insider ownership rate stands at 5.7%, suggesting a decent amount of insider shareholders. The largest shareholder is Icahn, Carl, C., whose 19% stake in the company is worth $517,104,254.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.