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Xerox (XRX) Appreciates 14% in a Month: Here's What to Know
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Xerox Holdings Corporation (XRX - Free Report) has had an impressive run in the past month. The stock has gained 13.7%, significantly outperforming the 7.6% rally of the industry it belongs to and the 4.2% rise of the Zacks S&P 500 composite.
What’s Behind the Rally
Xerox’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, with an average surprise of 84.9%. The bottom line is benefiting from "Project Own It," an enterprise-wide transformation initiative aimed at increasing productivity and operational efficiency, reducing costs, as well as realigning the business to changing market conditions. "Project Own It” is contributing significantly toward freeing up capital for investment.
With Xerox implementing a more flexible cost base and operating model to expand margins and channelize investments toward margin-accretive growth opportunities, we expect around 67% year-over-year increase in adjusted EPS and 190 basis points expansion in adjusted operating margin in 2023.
Xerox has a post-sale-driven business model that provides significant recurring revenues and cash generation. Around 77% of the company’s total revenues in 2022 were associated with contracted services, equipment maintenance services, consumable supplies and financing. This business model supports strong cash flows that help the company make strategic investments and penetrate markets with high growth potential. The January acquisition of Advanced UK is helping Xerox in vertical integration, along with strengthening its foothold in the U.K.
The company’s current ratio (a measure of liquidity) at the end of third-quarter fiscal 2023 was pegged at 1.12. A current ratio of more than 1 often indicates that the company will be able to easily pay off its short-term obligations.
Zacks Rank and Stocks to Consider
Xerox currently carries a Zacks Rank #3 (Hold).
Investors can consider the following better-ranked stocks:
ROL has an impressive earnings surprise history, beating the consensus mark in three of the four trailing quarters and matching once, the average surprise being 7.2%.
FTI Consulting (FCN - Free Report) also carries a Zacks Rank of 2. The consensus mark for fourth-quarter 2023 earnings is pegged at $1.57 per share, indicating 3.3% year-over-year growth.
FCN has an impressive earnings surprise history, beating the consensus mark in three of the four trailing quarters and missing once, the average surprise being 8.5%.
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Xerox (XRX) Appreciates 14% in a Month: Here's What to Know
Xerox Holdings Corporation (XRX - Free Report) has had an impressive run in the past month. The stock has gained 13.7%, significantly outperforming the 7.6% rally of the industry it belongs to and the 4.2% rise of the Zacks S&P 500 composite.
What’s Behind the Rally
Xerox’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, with an average surprise of 84.9%. The bottom line is benefiting from "Project Own It," an enterprise-wide transformation initiative aimed at increasing productivity and operational efficiency, reducing costs, as well as realigning the business to changing market conditions. "Project Own It” is contributing significantly toward freeing up capital for investment.
Xerox Holdings Corporation Price
Xerox Holdings Corporation price | Xerox Holdings Corporation Quote
With Xerox implementing a more flexible cost base and operating model to expand margins and channelize investments toward margin-accretive growth opportunities, we expect around 67% year-over-year increase in adjusted EPS and 190 basis points expansion in adjusted operating margin in 2023.
Xerox has a post-sale-driven business model that provides significant recurring revenues and cash generation. Around 77% of the company’s total revenues in 2022 were associated with contracted services, equipment maintenance services, consumable supplies and financing. This business model supports strong cash flows that help the company make strategic investments and penetrate markets with high growth potential. The January acquisition of Advanced UK is helping Xerox in vertical integration, along with strengthening its foothold in the U.K.
The company’s current ratio (a measure of liquidity) at the end of third-quarter fiscal 2023 was pegged at 1.12. A current ratio of more than 1 often indicates that the company will be able to easily pay off its short-term obligations.
Zacks Rank and Stocks to Consider
Xerox currently carries a Zacks Rank #3 (Hold).
Investors can consider the following better-ranked stocks:
Rollins (ROL - Free Report) currently carries a Zacks Rank #2 (Buy). For the fourth quarter of 2023, the Zacks Consensus Estimate for earnings is pegged at 20 cents, indicating year-over-year growth of 17.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ROL has an impressive earnings surprise history, beating the consensus mark in three of the four trailing quarters and matching once, the average surprise being 7.2%.
FTI Consulting (FCN - Free Report) also carries a Zacks Rank of 2. The consensus mark for fourth-quarter 2023 earnings is pegged at $1.57 per share, indicating 3.3% year-over-year growth.
FCN has an impressive earnings surprise history, beating the consensus mark in three of the four trailing quarters and missing once, the average surprise being 8.5%.