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Xerox Holdings Corporation (XRX) Down 6.2% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Xerox Holdings Corporation (XRX - Free Report) . Shares have lost about 6.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Xerox Holdings Corporation due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Xerox Beats On Q2 Earnings Estimates
Xerox reported impressive second-quarter 2021 results, with both earnings and revenues beating the Zacks Consensus Estimate.
Adjusted earnings per share of 47 cents surpassed the consensus mark by 34.3% and increased more than 100% year over year. Total revenues of $1.8 billion surpassed the consensus mark by 4.8% and surged 22.4% year over year on a reported basis and 18.1% on a constant-currency basis.
Revenues in Detail
Equipment sales revenues totaled $429 million, up 38.4% year over year on a reported basis and 34% on a constant-currency basis, contributing 24% to total revenues. Post-sale revenues totaled $1.4 billion, up 18.1% year over year on a reported basis and 13.8% on a constant-currency basis, contributing 76% to total revenues.
Operating Performance
Adjusted operating profit of $126 million increased more than 100% year over year. Adjusted operating margin expanded 280 basis points (bps) year over year to 7%. Selling, administrative and general expenses, as a percentage of revenues, decreased 490 bps year over year to 24.2%. Research, development and engineering expenses, as a percentage of revenues, came in at 4.4%, down from the year-ago quarter’s 5.2%.
Key Balance Sheet and Cash Flow Figures
Xerox exited the quarter with cash and cash equivalent balance of $2.1 billion compared with $2.4 billion at the end of the prior quarter. Long-term debt was $3.6 billion compared with $3.7 billion at the end of the previous quarter.
The company generated $214 million of cash from operating activities and paid out $54 million as dividends. Capital expenditures and free cash flow during the quarter were $16 million and $198 million, respectively.
2021 Guidance
Xerox expects operating cash flow and free cash flow to be $600 million and $500 million, respectively, for full-year 2021.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 25% due to these changes.
VGM Scores
Currently, Xerox Holdings Corporation has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Xerox Holdings Corporation has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Xerox Holdings Corporation (XRX) Down 6.2% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Xerox Holdings Corporation (XRX - Free Report) . Shares have lost about 6.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Xerox Holdings Corporation due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Xerox Beats On Q2 Earnings Estimates
Xerox reported impressive second-quarter 2021 results, with both earnings and revenues beating the Zacks Consensus Estimate.
Adjusted earnings per share of 47 cents surpassed the consensus mark by 34.3% and increased more than 100% year over year. Total revenues of $1.8 billion surpassed the consensus mark by 4.8% and surged 22.4% year over year on a reported basis and 18.1% on a constant-currency basis.
Revenues in Detail
Equipment sales revenues totaled $429 million, up 38.4% year over year on a reported basis and 34% on a constant-currency basis, contributing 24% to total revenues. Post-sale revenues totaled $1.4 billion, up 18.1% year over year on a reported basis and 13.8% on a constant-currency basis, contributing 76% to total revenues.
Operating Performance
Adjusted operating profit of $126 million increased more than 100% year over year. Adjusted operating margin expanded 280 basis points (bps) year over year to 7%. Selling, administrative and general expenses, as a percentage of revenues, decreased 490 bps year over year to 24.2%. Research, development and engineering expenses, as a percentage of revenues, came in at 4.4%, down from the year-ago quarter’s 5.2%.
Key Balance Sheet and Cash Flow Figures
Xerox exited the quarter with cash and cash equivalent balance of $2.1 billion compared with $2.4 billion at the end of the prior quarter. Long-term debt was $3.6 billion compared with $3.7 billion at the end of the previous quarter.
The company generated $214 million of cash from operating activities and paid out $54 million as dividends. Capital expenditures and free cash flow during the quarter were $16 million and $198 million, respectively.
2021 Guidance
Xerox expects operating cash flow and free cash flow to be $600 million and $500 million, respectively, for full-year 2021.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 25% due to these changes.
VGM Scores
Currently, Xerox Holdings Corporation has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Xerox Holdings Corporation has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.