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Why Is Xerox (XRX) Down 5.4% Since the Last Earnings Report?
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It has been about a month since the last earnings report for Xerox Corporation (XRX - Free Report) . Shares have lost about 5.4% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Xerox Beats on Q3 Earnings, Misses Revenues, View Revised
Xerox reported mixed third-quarter 2017 results with year-over-year increase in earnings despite lower revenues. GAAP earnings from continuing operations were 67 cents per share compared with 66 cents in the year-ago quarter.
Adjusted earnings from continuing operations for the reported quarter were 89 cents per share compared with 84 cents in the year-earlier quarter. Adjusted earnings comfortably beat the Zacks Consensus Estimate of 79 cents. The year-over-year increase in earnings despite lower revenues was primarily attributable to lower operating expenses.
Total revenue for the quarter was $2,497 million compared with $2,629 million in the year-earlier quarter. Revenues missed the Zacks Consensus Estimate of $2,509 million.
Margins
Adjusted gross profit for the quarter was $1,003 million compared with $1,050 million in the prior-year period. Adjusted gross profit margin for the quarter was 40.2% compared with 39.9% in the prior-year quarter. Adjusted operating margin was 12.2%, down 40 basis points year over year.
Financial Position
As of Sep 30, 2017, Xerox had cash and cash equivalents of $1,781 million while long-term debt was $5,235 million. Net cash used in operating activities for the quarter was $385 million compared with operating cash flow of $370 million in the year-ago period, bringing the respective cash flow tallies for the year to $53 million and $522 million.
Updated Guidance
Xerox updated its full-year 2017 guidance. It currently expects GAAP earnings from continuing operations in the range $1.97 to $2.13 per share (compared with previous range of $1.84 to $2.08) and adjusted earnings in the range $3.28 to $3.44 (compared with earlier range of $3.20 to $3.44). The company expects cash flow to be around $800 - $1,000 million, up from earlier range of $700 - $900 million.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last month as none of them issued any earnings estimate revisions.
Currently, Xerox's stock has a poor Growth Score of F, however its Momentum is doing a lot better with a C . The stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than momentum investors.
Outlook
Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.
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Why Is Xerox (XRX) Down 5.4% Since the Last Earnings Report?
It has been about a month since the last earnings report for Xerox Corporation (XRX - Free Report) . Shares have lost about 5.4% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Xerox Beats on Q3 Earnings, Misses Revenues, View Revised
Xerox reported mixed third-quarter 2017 results with year-over-year increase in earnings despite lower revenues. GAAP earnings from continuing operations were 67 cents per share compared with 66 cents in the year-ago quarter.
Adjusted earnings from continuing operations for the reported quarter were 89 cents per share compared with 84 cents in the year-earlier quarter. Adjusted earnings comfortably beat the Zacks Consensus Estimate of 79 cents. The year-over-year increase in earnings despite lower revenues was primarily attributable to lower operating expenses.
Total revenue for the quarter was $2,497 million compared with $2,629 million in the year-earlier quarter. Revenues missed the Zacks Consensus Estimate of $2,509 million.
Margins
Adjusted gross profit for the quarter was $1,003 million compared with $1,050 million in the prior-year period. Adjusted gross profit margin for the quarter was 40.2% compared with 39.9% in the prior-year quarter. Adjusted operating margin was 12.2%, down 40 basis points year over year.
Financial Position
As of Sep 30, 2017, Xerox had cash and cash equivalents of $1,781 million while long-term debt was $5,235 million. Net cash used in operating activities for the quarter was $385 million compared with operating cash flow of $370 million in the year-ago period, bringing the respective cash flow tallies for the year to $53 million and $522 million.
Updated Guidance
Xerox updated its full-year 2017 guidance. It currently expects GAAP earnings from continuing operations in the range $1.97 to $2.13 per share (compared with previous range of $1.84 to $2.08) and adjusted earnings in the range $3.28 to $3.44 (compared with earlier range of $3.20 to $3.44). The company expects cash flow to be around $800 - $1,000 million, up from earlier range of $700 - $900 million.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last month as none of them issued any earnings estimate revisions.
Xerox Corporation Price and Consensus
Xerox Corporation Price and Consensus | Xerox Corporation Quote
VGM Scores
Currently, Xerox's stock has a poor Growth Score of F, however its Momentum is doing a lot better with a C . The stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than momentum investors.
Outlook
Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.