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Is Xerox (XRX) a Great Value Stock Right Now?

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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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.

One stock to keep an eye on is Xerox (XRX - Free Report) . XRX is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 8.36, which compares to its industry's average of 15.43. Over the last 12 months, XRX's Forward P/E has been as high as 9.15 and as low as 5.01, with a median of 7.89.

We should also highlight that XRX has a P/B ratio of 1.48. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. XRX's current P/B looks attractive when compared to its industry's average P/B of 2.84. Within the past 52 weeks, XRX's P/B has been as high as 1.58 and as low as 0.92, with a median of 1.29.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. XRX has a P/S ratio of 0.77. This compares to its industry's average P/S of 1.01.

Finally, investors should note that XRX has a P/CF ratio of 8.35. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. XRX's P/CF compares to its industry's average P/CF of 10.18. XRX's P/CF has been as high as 13.22 and as low as 5.46, with a median of 9.74, all within the past year.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Xerox is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, XRX feels like a great value stock at the moment.


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