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Xerox (XRX)
NASDAQ:XRX
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Xerox
(NASDAQ:XRX)
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Rating:47Neutral
Price Target:
$2.00
▲(11.73% Upside)
Action:ReiteratedDate:01/30/26
The score is held down primarily by weak financial performance (large recent losses and high leverage with a thin equity base) and bearish technical trends. Guidance and synergy targets from the latest earnings call provide a credible path to improved profitability in 2026, while the high dividend yield adds some support, but near-term cash flow and leverage risks remain material.
Positive Factors
Recurring annuity revenue and MPS
Xerox's business model generates durable annuity cash flows via supplies, service contracts, managed print services and software/subscriptions. Multi-year MPS agreements and an installed base create predictable recurring revenue that supports stability in cash generation and customer lock-in over the medium term.
Consistent positive cash generation
Despite reported losses, Xerox consistently produced positive operating and free cash flow across the period. This cash-generation resilience provides an enduring source to pay down debt, fund integration work and support operations, improving solvency prospects if management sustains conversions and working capital actions.
Acquisitions, IT Solutions growth and synergy roadmap
Acquisitions (Lexmark, IT Savvy) plus strong IT Solutions growth materially expand scale and diversify revenue. Management's synergy and reinvention targets ($150–$200M integration + $100M savings) and clear 2026 profitability goals create a structural path to improved margins and earnings quality if execution continues.
Negative Factors
High leverage and thin equity cushion
Xerox's elevated debt and a materially reduced equity base weaken financial flexibility. High leverage increases interest burden and refinancing risk, constraining capital allocation for reinvestment or acquisitions. Deleveraging is required to restore a durable cushion against operational shocks and costs.
Deteriorated profitability and earnings quality
Sustained net losses and negative operating earnings signal weak earnings quality: cost structure, one‑time charges and margin pressure are eroding profitability. This undermines retained earnings, complicates deleveraging and raises the bar for management to convert gross margin gains into durable operating profits.
Organic revenue declines excluding acquisitions
Core print and post-sale revenues are contracting on a pro forma basis, meaning growth is reliant on acquisitions. Continued organic declines imply the installed base and supplies demand may shrink, limiting long-term margin stability and making growth dependent on integration success and non-organic initiatives.
Xerox (XRX) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$232.76M
Dividend Yield17.14%
Average Volume (3M)3.76M
Price to Earnings (P/E)―
Beta (1Y)2.02
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. Volume3,346,954
30 Day Avg. Volume3,759,240
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 Cap17.04
Enterprise Value/Revenue0.56
Enterprise Value/Gross Profit1.53
Enterprise Value/Ebitda-25.26
Forecast
1Y Price Target
$2.50Price Target Upside39.66% 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 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 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 pressured by large net losses in 2024–2025, weakening earnings quality, and a highly leveraged balance sheet with a very thin equity cushion. Positive operating and free cash flow offers some support, but free cash flow fell sharply in 2025, and leverage remains a key risk.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
1.79
Price Trends
2.33
Negative
2.68
Negative
3.68
Negative
Market Momentum
-0.16
Positive
36.97
Neutral
12.53
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 1.79 is below the 20-day moving average (MA) of 2.05, below the 50-day MA of 2.33, and below the 200-day MA of 3.68, indicating a bearish trend. The MACD of -0.16 indicates Positive momentum. The RSI at 36.97 is Neutral, neither overbought nor oversold. The STOCH value of 12.53 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 |
|---|---|---|---|---|---|---|---|
66 Neutral | $23.08B | 14.71 | 15.82% | 2.78% | -1.97% | 48.61% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
59 Neutral | $2.02B | 5.18 | 13.79% | ― | -4.13% | 2143.48% | |
53 Neutral | $2.63B | 11.53 | 21.77% | ― | -1.90% | ― | |
47 Neutral | $232.76M | -0.22 | -105.65% | 17.14% | 3.67% | 29.09% | |
45 Neutral | $151.88M | -0.51 | ― | ― | -4.93% | 18.65% | |
44 Neutral | $233.61M | -1.36 | -18.81% | ― | -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.