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Here's Why Investors Should Bet on Xerox (XRX) Stock Now

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Xerox Holdings Corporation (XRX - Free Report) has performed well in the past month and has the potential to increase momentum in the near term. If you haven’t taken advantage of its share price appreciation yet, it’s time you add the stock to your portfolio.

Why an Attractive Pick?

Share Price Appreciation: A glimpse at the company’s price trend reveals that the stock has had an impressive run lately. XRX returned 7.6% in the past month, which compares favorably with the 2.5% rise of the industry it belongs to and the 1.7% rally of the Zacks S&P 500 composite.

Solid Rank & VGM Score: Xerox currently carries a Zacks Rank #2 (Buy) and has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or #2, offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.

Northward Estimate Revisions: One estimate for the current year moved north over the past 60 days versus no southward revisions, reflecting analysts’ confidence in the company. Over the same period, the Zacks Consensus Estimate for the current year increased 3.3%.

Positive Earnings Surprise History: XRX has an impressive earnings surprise history. It outpaced the Zacks Consensus Estimate in the trailing four quarters, delivering an average earnings surprise of 84.9%.

Strong Growth Prospects: The Zacks Consensus Estimate for the company’s 2023 earnings of $1.9 indicates year-over-year growth of 69.6%.

Growth Drivers: Xerox’s earnings beat the Zacks Consensus Estimate in all 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 a 67% year-over-year increase in adjusted EPS and a 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.

Other Stocks to Consider

Here are some other top-ranked stocks from the broader Business Service sector.

Rollins (ROL - Free Report) currently carries a Zacks Rank #2. For the fourth quarter of 2023, the Zacks Consensus Estimate for earnings is pegged at 21 cents, indicating year-over-year growth of 23.5%. You can see the complete list of today’s Zacks #1 Rank 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 at present. 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%.

Unique Zacks Analysis of Your Chosen Ticker

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Xerox Holdings Corporation (XRX) - $25 value - yours FREE >>

FTI Consulting, Inc. (FCN) - $25 value - yours FREE >>

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