Back to top

Image: Bigstock

Xerox Holdings Corporation (XRX) Up 8.8% Since Last Earnings Report: Can It Continue?

Read MoreHide Full Article

A month has gone by since the last earnings report for Xerox Holdings Corporation (XRX - Free Report) . Shares have added about 8.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Xerox Holdings Corporation due for a pullback? 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 catalysts.

Xerox Q3 Earnings Miss

Xerox’s reported lower-than-expected third-quarter 2022 results.

Adjusted EPS of 19 cents missed the Zacks Consensus Estimate by 48.7% and declined 60.4% year over year. Total revenues of $1.8 billion lagged the consensus mark by 1.7% and decreased marginally year over year on a reported basis. Revenues increased 4.7% on a constant-currency basis.

Quarter Details

Print and Other segment revenues totaled $1.6 billion, up slightly year over year. Financing (FITTLE) segment’s revenues totaled $150 million, down 12.3% year over year.

Sales revenues totaled $690 million, up from $657 million reported in the year-ago quarter. Services, maintenance and rental revenues totaled $1 billion, down 3.4% year over year. Financing revenues of $51 million decreased 7.2% year over year.

Adjusted operating income came in at $65 million compared with $74 million in the year-ago quarter. Adjusted operating margin of 3.7% declined 50 basis points (bps) year over year.

Xerox exited the quarter with a cash and cash equivalent balance of $932 million compared with $1.2 billion at the end of the prior quarter. Long-term debt was $2.7 billion compared with $2.8 billion at the end of the previous quarter. The company’s operating cash outflow and free cash outflow were $8 million and $18 million, respectively, in the quarter.

2022 Guidance

Xerox lowered its 2022 guidance. It now expects its full-year 2022 revenues to be between $7 billion and $7.1 billion compared with the previous expectation of at least $7.1 billion. Free cash flow is now expected to be at least $125 million compared with the previous expectation of at least $400 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -25% due to these changes.

VGM Scores

Currently, Xerox Holdings Corporation has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Xerox Holdings Corporation has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Xerox Holdings Corporation (XRX) - free report >>

Published in