Xerox (XRX) AI Stock Analysis

• Market Cap: $322.66M
• Dividend Yield: 17.14%
• Average Volume (3M): 2.85M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.97
• Revenue Growth: 3.67%
• EPS Growth: 29.09%
• Country: US
• Employees: 17,600
• Sector: Industrials
• Sector Strength: 72
• Industry: Information Technology Services
• EPS (TTM): 0.20
• Shares Outstanding: 128,040,010
• 10 Day Avg. Volume: 2,150,289
• 30 Day Avg. Volume: 2,852,188
• PEG Ratio: >-0.01
• Price to Book (P/B): 0.81
• Price to Sales (P/S): 0.17
• P/FCF Ratio: 2.24
• Enterprise Value/Market Cap: 15.34
• Enterprise Value/Revenue: 0.75
• Enterprise Value/Gross Profit: 1.95
• Enterprise Value/Ebitda: 55.63
• 1Y Price Target: $3.50
• Price Target Upside: 35.14% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 1
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 39 Underperform
• Price Target: $2.50 ▼(-3.47% Downside)

Xerox's overall stock score reflects significant financial and operational challenges. The most impactful factors are the negative profitability and high leverage, which weigh heavily on the financial performance score. Technical analysis also indicates bearish momentum. While the earnings call provided some positive insights into future growth and synergies, the current valuation and market conditions present substantial risks.

Positive Factors

Successful Integration of Acquisitions

The successful integration of Lexmark and ITsavvy enhances operational efficiency and cost savings, strengthening Xerox's competitive position and long-term profitability.

IT Solutions Business Growth

Growth in the IT Solutions segment indicates strong demand and market expansion, supporting Xerox's strategic shift towards digital services and long-term revenue growth.

Free Cash Flow Improvement

Improved free cash flow enhances Xerox's financial flexibility, allowing for reinvestment in growth initiatives and debt reduction, supporting long-term stability.

Negative Factors

High Leverage

High leverage poses a risk to Xerox's financial health, potentially limiting its ability to invest in growth and increasing vulnerability to economic downturns.

Revenue Decline

Declining revenue and margins highlight challenges in maintaining market share and profitability, impacting Xerox's long-term growth prospects.

Challenges with Equipment Sales

Declining equipment sales reflect market saturation and competitive pressures, challenging Xerox's traditional revenue streams and necessitating strategic adaptation.

Xerox Business Overview & Revenue Model

Company Description

Xerox 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 Money

Xerox generates revenue through several key streams, primarily from its hardware sales, which include printers and copiers, and from its services segment, which encompasses managed print services and document outsourcing. The company also earns income from software solutions that improve workflow and document management. Additionally, Xerox has established strategic partnerships with other technology firms to enhance its service offerings, allowing it to penetrate new markets and expand its customer base. Recurring revenue from supplies, maintenance contracts, and support services further contributes to its financial sustainability, providing a stable income stream over time.

Xerox Financial Statement Overview

Summary

Xerox faces significant financial challenges with negative profitability and high leverage. Despite positive revenue growth and cash flow generation, the high debt levels and negative net profit margin highlight areas of concern. The company needs to improve margins and reduce leverage to enhance financial stability.

Income Statement

Xerox's income statement reveals a challenging financial position with negative net income and declining EBIT and EBITDA margins in the TTM period. Despite a positive revenue growth rate of 7.01% TTM, the company struggles with profitability, as indicated by a negative net profit margin of -14.85%. The gross profit margin is relatively stable at 38.47%, but the overall profitability metrics suggest significant room for improvement.

Balance Sheet

The balance sheet shows a high debt-to-equity ratio of 11.91 TTM, indicating significant leverage and potential financial risk. The return on equity is negative, reflecting ongoing losses. However, the equity ratio is relatively stable, suggesting some balance in asset financing. The high leverage poses a risk, but the company maintains a substantial asset base.

Cash Flow

Xerox's cash flow statement indicates a positive free cash flow growth rate of 17.22% TTM, which is a positive sign. The operating cash flow to net income ratio is low at 0.12, reflecting challenges in converting income into cash. However, the free cash flow to net income ratio is relatively strong at 0.86, suggesting efficient cash generation relative to net income.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	6.61B	6.22B	6.89B	7.11B	7.04B	7.02B
Gross Profit	2.54B	1.96B	2.31B	2.32B	2.40B	2.44B
EBITDA	89.00M	-822.00M	291.00M	36.00M	-49.00M	718.00M
Net Income	-977.00M	-1.32B	1.00M	-322.00M	-455.00M	192.00M
Balance Sheet
Total Assets	10.07B	8.37B	10.01B	11.54B	13.22B	14.74B
Cash, Cash Equivalents and Short-Term Investments	479.00M	576.00M	519.00M	1.04B	1.84B	2.63B
Total Debt	4.41B	3.59B	3.46B	3.96B	4.54B	4.79B
Total Liabilities	9.47B	7.06B	7.24B	7.97B	8.77B	8.93B
Stockholders Equity	579.00M	1.29B	2.75B	3.56B	4.44B	5.81B
Cash Flow
Free Cash Flow	326.00M	467.00M	649.00M	102.00M	561.00M	474.00M
Operating Cash Flow	410.00M	511.00M	686.00M	159.00M	629.00M	548.00M
Investing Cash Flow	-909.00M	-198.00M	-5.00M	-78.00M	-85.00M	-246.00M
Financing Cash Flow	455.00M	-271.00M	-1.20B	-822.00M	-1.31B	-416.00M

Xerox Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 2.59
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For XRX, the sentiment is Neutral. The current price of 2.59 is above the 20-day moving average (MA) of 2.56, below the 50-day MA of 2.74, and below the 200-day MA of 4.04, indicating a neutral trend. The MACD of -0.07 indicates Negative momentum. The RSI at 49.04 is Neutral, neither overbought nor oversold. The STOCH value of 83.81 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for XRX.

Xerox Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WIT	74 Outperform	$31.54B	19.39	16.39%	2.78%	-1.97%	48.61%
KD	64 Neutral	$6.19B	16.06	35.51%	―	-1.90%	―
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
DXC	62 Neutral	$2.60B	7.44	12.33%	―	-4.13%	2143.48%
CNDT	47 Neutral	$307.31M	-2.08	-15.87%	―	-12.45%	-142.77%
UIS	45 Neutral	$205.36M	-0.68	―	―	-4.93%	18.65%
XRX	39 Underperform	$322.66M	-0.33	-93.23%	17.14%	3.67%	29.09%