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Is Xerox (XRX) Stock Undervalued Right Now?

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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

Xerox (XRX - Free Report) is a stock many investors are watching right now. XRX is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 6.50, which compares to its industry's average of 12.89. Over the past year, XRX's Forward P/E has been as high as 10.32 and as low as 6.50, with a median of 8.12.

Another valuation metric that we should highlight is XRX's P/B ratio of 1.19. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 2.16. XRX's P/B has been as high as 1.64 and as low as 1.10, with a median of 1.31, over the past year.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. XRX has a P/S ratio of 0.51. This compares to its industry's average P/S of 0.73.

These are just a handful of the figures considered in Xerox's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that XRX is an impressive value stock right now.


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