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Xerox (XRX) Q4 Earnings: What Lies Ahead for the Stock?
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Xerox Corporation (XRX - Free Report) is scheduled to report fourth-quarter 2017 results before the opening bell on Jan 31. Adjusted earnings of the company beat the Zacks Consensus Estimate by 10 cents in the last reported quarter. Also, over the trailing four quarters, the company delivered a positive average earnings surprise of 2.5%, beating estimates twice.
Let’s see what’s in store in the company’s upcoming quarter results.
Key Factors to Consider
During the quarter, Xerox announced that it has purchased some intellectual property rights of Thin Film Electronics ASA. These involved printed rewriteable memory labels paid through an up-front payment plus an earn-out based on the existing agreed-to royalty schedule. Recently, there has been a swift rise in demand for printed rewriteable memory labels by users, particularly in North America and Europe. This is due to the myriad advantages that the product offers over any other electronic verification solution. The attempt by Xerox to capitalize on this rising market demand may augment its revenues and strengthen its market position.
Xerox is reprioritizing investments and accelerating its restructuring actions and services to improve revenues and margins. As part of the restructuring efforts, it has also decided to execute a three-year strategic transformation program which will target incremental savings of $600 million across all segments. When combined with savings from cost streamlining actions currently in process, Xerox is attempting to realize cumulative cost reduction of $2.4 billion over the next three years.
The company also remains committed to its five-plank strategy that is centered on portfolio management, global growth, cost transformation, operational excellence and analytics. With sustained investments to expand geographical footprint and build its services capabilities in areas that provide significant customer value, Xerox expects to reap benefits in the long run.
The Zacks Consensus Estimate for Xerox’s fourth-quarter revenues is $2,645 million, slightly lower than reported revenues of $2,734 million in the prior-year quarter.
Advancements in IT have resulted in the replacement of the traditional means of sending and storing information with the digital media. As a result, Xerox is grappling with decreased demand for paper-related systems and products while its attempts to leverage the business process outsourcing market failed to lend growth momentum.
Earnings Whispers
Our proven model does not conclusively show that Xerox is likely to beat earnings this quarter as it does not possess the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below:
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00% with both pegged at 94 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Xerox has a Zacks Rank #3. While this increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Stocks to Consider
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
AmerisourceBergen Corporation has an Earnings ESP of +1.50% and a Zacks Rank #2.
American Financial Group, Inc. (AFG - Free Report) has an Earnings ESP of +1.82% and a Zacks Rank #2.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Xerox (XRX) Q4 Earnings: What Lies Ahead for the Stock?
Xerox Corporation (XRX - Free Report) is scheduled to report fourth-quarter 2017 results before the opening bell on Jan 31. Adjusted earnings of the company beat the Zacks Consensus Estimate by 10 cents in the last reported quarter. Also, over the trailing four quarters, the company delivered a positive average earnings surprise of 2.5%, beating estimates twice.
Let’s see what’s in store in the company’s upcoming quarter results.
Key Factors to Consider
During the quarter, Xerox announced that it has purchased some intellectual property rights of Thin Film Electronics ASA. These involved printed rewriteable memory labels paid through an up-front payment plus an earn-out based on the existing agreed-to royalty schedule. Recently, there has been a swift rise in demand for printed rewriteable memory labels by users, particularly in North America and Europe. This is due to the myriad advantages that the product offers over any other electronic verification solution. The attempt by Xerox to capitalize on this rising market demand may augment its revenues and strengthen its market position.
Xerox is reprioritizing investments and accelerating its restructuring actions and services to improve revenues and margins. As part of the restructuring efforts, it has also decided to execute a three-year strategic transformation program which will target incremental savings of $600 million across all segments. When combined with savings from cost streamlining actions currently in process, Xerox is attempting to realize cumulative cost reduction of $2.4 billion over the next three years.
The company also remains committed to its five-plank strategy that is centered on portfolio management, global growth, cost transformation, operational excellence and analytics. With sustained investments to expand geographical footprint and build its services capabilities in areas that provide significant customer value, Xerox expects to reap benefits in the long run.
The Zacks Consensus Estimate for Xerox’s fourth-quarter revenues is $2,645 million, slightly lower than reported revenues of $2,734 million in the prior-year quarter.
Advancements in IT have resulted in the replacement of the traditional means of sending and storing information with the digital media. As a result, Xerox is grappling with decreased demand for paper-related systems and products while its attempts to leverage the business process outsourcing market failed to lend growth momentum.
Earnings Whispers
Our proven model does not conclusively show that Xerox is likely to beat earnings this quarter as it does not possess the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below:
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00% with both pegged at 94 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Xerox Corporation Price and EPS Surprise
Xerox Corporation Price and EPS Surprise | Xerox Corporation Quote
Zacks Rank: Xerox has a Zacks Rank #3. While this increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Stocks to Consider
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Apple Inc. (AAPL - Free Report) has an Earnings ESP of +1.56% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
AmerisourceBergen Corporation has an Earnings ESP of +1.50% and a Zacks Rank #2.
American Financial Group, Inc. (AFG - Free Report) has an Earnings ESP of +1.82% and a Zacks Rank #2.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2018 today >>