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Xerox (XRX)
NASDAQ:XRX
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Xerox
(NASDAQ:XRX)
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Rating:47Neutral
Price Target:
$1.50
▲(3.45% Upside)
Action:ReiteratedDate:03/18/26
The score is held down primarily by weak financial performance (large recent losses and high leverage with a thin equity buffer) and bearish technicals (price below key moving averages with negative MACD). Guidance and synergy plans provide a potential improvement path, and the high dividend yield offers some support, but near-term execution and cash/leverage risks remain significant.
Positive Factors
Recurring revenue & installed base
Xerox's installed-base model—supplies, service contracts, multi-year MPS agreements and software subscriptions—creates predictable annuity revenue. That stabilizes cash flows versus pure hardware sales, supports higher lifetime margins through cross-sell, and provides durable revenue visibility while the company executes turnaround plans.
Cash generation resilience
Consistent positive operating and free cash flow gives Xerox a structural buffer to fund operations, service debt and invest in integration work. Even with a recent decline, recurring cash generation underpins deleveraging and execution of profit-improvement measures without immediate reliance on equity markets.
Acquisition synergies & profit targets
Management has articulated quantifiable synergy and reinvention targets tied to acquisitions and integration, plus a clear leverage objective. If delivered, these structural improvements should materially boost margins, free up cash for debt paydown, and create a sustainable earnings base rather than relying solely on cyclical hardware demand.
Negative Factors
High leverage, thin equity
With roughly $4.2B of debt and a very small equity buffer, Xerox faces heightened refinancing and covenant risk. Elevated leverage limits strategic flexibility, increases interest expense sensitivity, and makes successful execution of turnaround initiatives contingent on sustained cash generation and timely debt reduction.
Weak profitability & large losses
Sustained net losses and negative operating earnings erode equity and constrain investment capacity. Persistent profitability shortfalls force reliance on cost cuts, disposals or one-time gains to restore earnings, increasing execution risk and making long-term margin recovery and competitive reinvestment more challenging.
Organic decline in core print/post-sale
Core print and post-sale declines undermine the annuity revenue engine from supplies and services. Continued organic weakness means growth is increasingly acquisition-driven, raising integration and execution risk while reducing long-term margin resilience tied to the installed base.
Xerox (XRX) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$186.47M
Dividend Yield17.14%
Average Volume (3M)3.47M
Price to Earnings (P/E)―
Beta (1Y)1.98
Revenue Growth3.67%
EPS Growth29.09%
CountryUS
Employees17,600
SectorIndustrials
Sector Strength72
IndustryInformation Technology Services
Share Statistics
EPS (TTM)-0.10
Shares Outstanding128,597,950
10 Day Avg. Volume3,807,670
30 Day Avg. Volume3,465,659
Financial Highlights & Ratios
PEG Ratio0.01
Price to Book (P/B)0.46
Price to Sales (P/S)0.04
P/FCF Ratio1.17
Enterprise Value/Market Cap21.01
Enterprise Value/Revenue0.56
Enterprise Value/Gross Profit1.52
Enterprise Value/Ebitda-24.96
Forecast
1Y Price Target
$2.50Price Target Upside72.41% Upside
Rating ConsensusHold
Number of Analyst Covering1
EPS Forecast (FY)0.44
Revenue Forecast (FY)$7.61B
Xerox Business Overview & Revenue Model
Company DescriptionXerox Holdings Corporation, a workplace technology company, designs, develops, and sells document management systems and solutions in the United States, Europe, Canada, and internationally. It offers workplace solutions, including desktop monochrome, and color and multifunction printers; digital printing presses and light production devices, and solutions; and digital services that leverage workflow automation, personalization and communication software, content management solutions, and digitization services. The company also provides graphic communications and production solutions; and IT services, end user computing devices, network infrastructure, communications technology, and a range of managed IT solutions, such as technology product support, professional engineering, and commercial robotic process automation. In addition, it provides FreeFlow a portfolio of software solutions for the automation and integration to the processing of print job comprises file preparation, final production, and electronic publishing; XMPie, a personalization and communication software that support the needs of omni-channel communications customers; DocuShare, a content management platform to capture, store, and share paper and digital content; and CareAR, an enterprise augmented reality business. Further, the company sells paper products and wide-format systems. The company sells its products and services directly to its customers through its direct sales force, as well as through independent agents, dealers, value-added resellers, systems integrators, and e-commerce marketplaces. Xerox Holdings Corporation was founded in 1906 and is headquartered in Norwalk, Connecticut.
How the Company Makes MoneyXerox makes money primarily by selling printing and imaging equipment and by generating recurring revenue tied to the ongoing use and servicing of that installed base. Key revenue streams include: (1) Equipment sales: revenue from the sale of office multifunction printers and printers, and higher-end production printing systems. (2) Post-sale annuity streams: recurring revenue from supplies (e.g., toner and other consumables) and from service and maintenance contracts that support devices in the field. (3) Managed Print Services (MPS) and related outsourcing: contracted services where Xerox manages a customer’s print environment (fleet optimization, maintenance, supplies replenishment, and usage monitoring), typically billed under multi-year agreements with periodic fees and/or usage-based charges. (4) Software and digital/workflow services: revenue from document and workflow software and related professional services/implementation, where available through licensing/subscription and service engagements. Revenue mix and profitability are influenced by the size and utilization of the installed base (which drives supplies and service), contract renewal and retention rates in MPS, pricing and competition in hardware, and the company’s distribution model (direct sales and channels), which can affect sales volumes and margins. Significant partnerships or specific revenue-share arrangements: null.
Xerox Key Performance Indicators (KPIs)
Any
Revenue by Segment
Breaks down revenue across different business segments, providing insight into which areas are leading growth and how diversified the company’s income streams are.
Breaks down revenue across different business segments, providing insight into which areas are leading growth and how diversified the company’s income streams are.
Data provided by:
The Fly
The FlyXerox Earnings Call Summary
Earnings Call Date:Jan 29, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 28, 2026
Earnings Call Sentiment Neutral
The call presented a mixed picture: acquisitions (Lexmont, IT Savvy) drove reported revenue growth, strong IT Solutions momentum, tangible integration synergies, AI-driven efficiencies, and a clear 2026 profitability target. However, organic revenue declines, margin compression from tariffs and product cost inflation, weakened free cash flow, high leverage (6.7x), and supply/DRAM price risk are material concerns. Management laid out detailed mitigation steps, synergy targets, and a deleveraging plan that provide a credible path to improvement, but near-term risks and cash/leverage pressures temper the outlook.Q4-2025 Updates
Positive Updates
Reported Revenue Growth Driven by Acquisitions
Q4 revenue of $2.03B grew ~26% year-over-year (24% in constant currency) and full-year revenue of $7.02B grew ~13% (12% CC), with growth primarily driven by the Lexmont and IT Savvy acquisitions.
IT Solutions Strong Momentum
IT Solutions revenue rose 39% year-over-year (reflecting full-quarter inclusion of IT Savvy); pro forma gross billings increased 13% and bookings increased 8% in Q4. IT Solutions gross profit was $36M with a 22.7% gross margin, up ~610 bps year-over-year, and segment profit margin reached 5.8%.
Guidance for Meaningful Profit Improvement in 2026
Company expects 2026 revenue > $7.5B (~7% growth vs 2025) and adjusted operating income of $450M–$500M, an improvement of more than $200M versus 2025, driven by $150M–$200M integration synergies and $100M of reinvention savings.
Free Cash Flow and Debt Reduction Progress
Q4 free cash flow was $184M; since the Lexmont transaction net debt has been reduced by $366M. End-of-quarter cash was $565M and total debt was $4.2B (down $160M sequentially). Management plans to use excess free cash flow for debt repayment and targets ~3x TTM EBITDA leverage over the medium term.
Operational and AI-Driven Efficiency Gains
Launched an AI center of excellence and AI-powered service agents handling thousands of interactions, automated over $10M in credit hold actions, surfaced insights from 1.4M collector comments, and used analytics/ML to detect counterfeit supply activity, all delivering measurable cost and working capital benefits.
Commercial and Product Wins
Notable customer and channel wins include a global joint win with Morrisons (UK grocery retailer), rollout of Lexmont-produced A3 devices with positive channel reaction, new partnership with RJ Young, and launch of Xerox Tri Shield 360 cybersecurity product for SMBs—strengthening cross-sell opportunities across ~200,000 customers.
Conversion of Backlog and Bookings Strength
Management reported increases in bookings, billings, and backlog in Q4 and indicated backlog represents future revenue opportunity as it converts.
Negative Updates
Organic Revenue Declines Excluding Acquisitions
On a pro forma/organic basis, revenue trends were weaker: Q4 pro forma print/post-sale revenues declined (~9% pro forma; ~5% excluding reinvention effects) and full-year revenue excluding acquisition benefits declined ~8%.
Margin Compression and Lower Profitability
Adjusted operating income margin was 5.0% in Q4, down 140 bps year-over-year; full-year adjusted operating margin was 3.5%, down 140 bps. Adjusted gross margins were pressured by tariffs and higher product costs (management cited ~160 bps tariff impact plus ~160 bps product cost impact).
Free Cash Flow and Cash Conversion Weakness
Q4 free cash flow of $184M was down $150M year-over-year; full-year free cash flow was $133M, down $334M versus prior year. Operating cash flow for the quarter was $208M vs $351M prior year, reflecting lower net income, finance receivable sales timing, and working capital impacts.
High Leverage and Credit Metrics
Pro forma gross leverage was ~6.7x trailing twelve months EBITDA at quarter end, significantly above the company's medium-term target of ~3x, leaving leverage reduction as a critical near-term priority.
DRAM/Memory Price Spike and Supply Risk
A recent spike in DRAM/memory prices is increasing costs and creating deal delays, particularly impacting the IT Solutions business. Management expects modest print impact in H1 but larger availability/price pressure in H2 2026.
One-Time and Region-Specific Revenue Reductions
Sale of finance receivables in Portugal and France reduced Q4 revenue by $16M and adjusted operating income by $13M; XFS forward-flow dynamics are expected to create approximately $50M of revenue headwinds and ~$40M of operating income headwinds in 2026.
Higher Interest Expense and Elevated Tax Rate
Adjusted other expenses (net) rose to $85M in Q4, up $54M year-over-year mainly from higher net interest expense tied to acquisition financing. Adjusted tax rate jumped to 147.1% from 32.9% the prior year, adversely affecting net results.
Company Guidance
Management guided to 2026 revenue of greater than $7.5 billion (about 7% growth vs. 2025, inclusive of a full year of Lexmark) and adjusted operating income of $450–$500 million (more than $200 million improvement vs. 2025), driven by $150–$200 million of integration synergies and $100 million of reinvention savings; free cash flow is expected to be approximately $250 million (assuming roughly $335 million of forward‑flow benefits and slightly over $1 billion of receivables by year‑end), with net interest expense of ~$290 million and ~$160 million of pension contributions, while management also flagged a ~$50 million revenue and ~$40 million operating income headwind from XFS, tariffs as an H1 headwind/H2 tailwind, memory cost pressure impacting IT (and modestly print in H1, more in H2), and reiterated synergy targets of at least $300 million from Lexmark plus $1 billion+ of profit improvement and a medium‑term leverage target of ~3x TTM EBITDA (current pro forma gross leverage 6.7x; cash $565M; total debt $4.2B).Xerox Financial Statement Overview
Summary
Financial profile is challenged: revenue is broadly flat but profitability deteriorated into substantial net losses in 2024–2025, while leverage is high and the equity cushion is thin. Positive operating/free cash flow provides some support, but free cash flow fell sharply in 2025 and sustainability depends on restoring earnings and reducing debt.Income Statement
Revenue has been broadly flat over the period, with a modest rebound in 2025 after a decline in 2024. However, profitability has deteriorated meaningfully: net losses were very large in 2024 and 2025 (roughly -21% and -15% net margins, respectively), and 2025 shows negative operating earnings as well. Gross margin improved sharply in 2025 versus 2024, but that improvement did not translate into bottom-line profitability, signaling elevated operating costs/charges and weak earnings quality.28
Negative
Balance Sheet
Leverage is a key overhang. Total debt remains high (about $4.2B in 2025), while equity has fallen materially over time and is very low in 2025 (about $0.45B), reducing the balance-sheet cushion. Prior years already showed elevated debt relative to equity (e.g., 2024 debt-to-equity near 2.8x), and the shrinking equity base increases financial risk and limits flexibility even though total assets remain sizable.34
Negative
Cash Flow
Cash generation is a relative bright spot: operating cash flow and free cash flow stayed positive in every year shown. That said, free cash flow declined sharply in 2025 (down ~31% year over year) and the business is producing cash alongside large reported losses in 2024–2025, which can be supportive near-term but also raises questions about sustainability if earnings do not stabilize. Overall, cash flow is resilient but trending weaker recently.52
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 7.02B | 6.22B | 6.89B | 7.11B | 7.04B |
| Gross Profit | 2.59B | 1.96B | 2.31B | 2.32B | 2.40B |
| EBITDA | -157.00M | -822.00M | 291.00M | 36.00M | -49.00M |
| Net Income | -1.03B | -1.32B | 1.00M | -322.00M | -455.00M |
Balance Sheet | |||||
| Total Assets | 9.82B | 8.37B | 10.01B | 11.54B | 13.22B |
| Cash, Cash Equivalents and Short-Term Investments | 512.00M | 576.00M | 519.00M | 1.04B | 1.84B |
| Total Debt | 4.25B | 3.59B | 3.46B | 3.96B | 4.54B |
| Total Liabilities | 9.15B | 7.06B | 7.24B | 7.97B | 8.77B |
| Stockholders Equity | 658.00M | 1.29B | 2.75B | 3.56B | 4.44B |
Cash Flow | |||||
| Free Cash Flow | 259.00M | 467.00M | 649.00M | 102.00M | 561.00M |
| Operating Cash Flow | 350.00M | 511.00M | 686.00M | 159.00M | 629.00M |
| Investing Cash Flow | -698.00M | -198.00M | -5.00M | -78.00M | -85.00M |
| Financing Cash Flow | 278.00M | -271.00M | -1.20B | -822.00M | -1.31B |
Xerox Technical Analysis
Negative
1.45
Price Trends
2.09
Negative
2.45
Negative
3.43
Negative
Market Momentum
-0.14
Positive
30.14
Neutral
2.88
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For XRX, the sentiment is Negative. The current price of 1.45 is below the 20-day moving average (MA) of 1.75, below the 50-day MA of 2.09, and below the 200-day MA of 3.43, indicating a bearish trend. The MACD of -0.14 indicates Positive momentum. The RSI at 30.14 is Neutral, neither overbought nor oversold. The STOCH value of 2.88 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for XRX.
Xerox Risk Analysis
Xerox disclosed 28 risk factors in its most recent earnings report. Xerox reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Xerox Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
67 Neutral | $21.68B | 21.25 | 15.49% | 2.78% | -1.97% | 48.61% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
59 Neutral | $2.01B | 6.07 | 13.41% | ― | -4.13% | 2143.48% | |
53 Neutral | $2.83B | 26.53 | 20.43% | ― | -1.90% | ― | |
47 Neutral | $186.47M | -0.29 | -107.19% | 17.14% | 3.67% | 29.09% | |
45 Neutral | $167.07M | 2.63 | 126.78% | ― | -4.93% | 18.65% | |
43 Neutral | $191.84M | -1.68 | -20.84% | ― | -12.45% | -142.77% |
* Industrials Sector Average
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.