Xerox (XRX) AI Stock Analysis

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Xerox

(NASDAQ:XRX)

42Neutral

Xerox's stock is challenged by significant financial difficulties, including declining revenues and high leverage, which are reflected in its poor financial performance score. The technical indicators suggest further downside risk. The high dividend yield and strategic moves provide some optimism, but the negative earnings and revenue trends significantly weigh down the overall score.

Positive Factors

Acquisition Benefits

The acquisition of Lexmark by Xerox is expected to accelerate the path towards double-digit operating margins due to higher margins and robust synergies from Lexmark.

Financial Performance

The acquisition is anticipated to fuel leverage reduction thanks to the higher profitability of Lexmark and an improved balance sheet.

Negative Factors

Dividend Cut

Cutting the dividend, which has been crucial for value investors, is perceived as a negative aspect of the acquisition.

Operational Challenges

Lower workforce productivity, delayed product launches, and competitive headwinds have put pressure on results across all three revenue segments.

Strategic Challenges

The acquisition raises concerns due to recent strategic actions by Xerox that focused on reducing complexity and costs, adding layers of complexity to the transformation.

Xerox (XRX) vs. S&P 500 (SPY)

Market Cap

$679.26M

Dividend Yield16.2%

Average Volume (3M)4.46M

Price to Earnings (P/E)―

Beta (1Y)1.65

Revenue Growth-7.49%

EPS Growth-575.59%

CountryUS

Employees17,600

SectorTechnology

Sector Strength77

IndustryInformation Technology Services

Share Statistics

EPS (TTM)-0.06

Shares Outstanding125,789,540

10 Day Avg. Volume4,392,750

30 Day Avg. Volume4,459,856

Financial Highlights & Ratios

PEG Ratio-0.38

Price to Book (P/B)0.65

Price to Sales (P/S)0.00

P/FCF Ratio1.49

Enterprise Value/Market Cap5.38

Enterprise Value/Revenue0.14

Enterprise Value/Gross Profit1.41

Enterprise Value/Ebitda-1.48

Forecast

1Y Price Target

$5.50

Price Target Upside3.00% Upside

Rating ConsensusHold

Number of Analyst Covering1

Xerox Business Overview & Revenue Model

Company DescriptionXerox Holdings Corporation, a workplace technology company, designs, develops, and sells document management systems and solutions in the United States, Europe, Canada, and internationally. It offers workplace solutions, including desktop monochrome, and color and multifunction printers; digital printing presses and light production devices, and solutions; and digital services that leverage workflow automation, personalization and communication software, content management solutions, and digitization services. The company also provides graphic communications and production solutions; and IT services, end user computing devices, network infrastructure, communications technology, and a range of managed IT solutions, such as technology product support, professional engineering, and commercial robotic process automation. In addition, it provides FreeFlow a portfolio of software solutions for the automation and integration to the processing of print job comprises file preparation, final production, and electronic publishing; XMPie, a personalization and communication software that support the needs of omni-channel communications customers; DocuShare, a content management platform to capture, store, and share paper and digital content; and CareAR, an enterprise augmented reality business. Further, the company sells paper products and wide-format systems. The company sells its products and services directly to its customers through its direct sales force, as well as through independent agents, dealers, value-added resellers, systems integrators, and e-commerce marketplaces. Xerox Holdings Corporation was founded in 1906 and is headquartered in Norwalk, Connecticut.

How the Company Makes MoneyXerox generates revenue through the sale and leasing of its printing and copying equipment, as well as through providing managed print and document services. A significant portion of its income is derived from long-term service contracts and maintenance agreements associated with its hardware products. The company also earns money from the sale of consumables such as toner and paper. Furthermore, Xerox has strategic partnerships and collaborations that enhance its service offerings in areas like IT services and digital transformation, contributing to its earnings. These diverse revenue streams enable Xerox to maintain a stable financial position in a dynamic market landscape.

Xerox Financial Statement Overview

Summary

Xerox is facing financial challenges with declining revenues, negative net income, and high leverage. Despite moderate cash flow performance, the overall financial health is weakened by substantial debt and reduced profitability.

Income Statement

Negative

Xerox's income statement shows a concerning trend with declining revenues and negative net income. The TTM (Trailing-Twelve-Months) data indicates a significant negative EBIT and EBITDA margin, highlighting operational challenges. Despite a slight gross profit margin, the overall profitability and revenue growth are negative, reflecting financial stress.

Balance Sheet

Negative

The balance sheet reveals a high debt-to-equity ratio, indicating substantial leverage, which poses financial risk. The equity ratio has also diminished over time, signaling reduced financial stability. While the company maintains some assets, the declining stockholders' equity suggests weakened financial health.

Cash Flow

Neutral

Xerox's cash flow demonstrates moderate performance with positive free cash flow, albeit with declining growth. The operating cash flow to net income ratio is favorable, indicating effective cash generation relative to profits. However, the overall cash flow trend is declining, reflecting potential liquidity constraints.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
6.18B	6.22B	6.89B	7.11B	7.04B	7.02B
	Gross Profit
2.59B	1.96B	2.31B	2.32B	2.40B	2.63B
	EBIT
-1.06B	159.00M	7.00M	689.00M	1.14B	519.00M
	EBITDA
-845.00M	-822.00M	307.00M	47.00M	-46.00M	718.00M
	Net Income Common Stockholders
-1.30B	-1.32B	1.00M	-325.00M	-458.00M	192.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
336.00M	576.00M	519.00M	1.04B	1.84B	2.63B
	Total Assets
8.21B	8.37B	10.01B	11.54B	13.22B	14.74B
	Total Debt
3.30B	3.59B	3.46B	3.73B	4.25B	4.44B
	Net Debt
2.96B	3.01B	2.94B	2.68B	2.41B	1.82B
	Total Liabilities
6.93B	7.06B	7.24B	8.18B	8.56B	8.93B
	Stockholders Equity
1.06B	1.29B	2.75B	3.34B	4.65B	5.81B
Cash Flow		Free Cash Flow
467.00M	467.00M	649.00M	102.00M	561.00M	474.00M
	Operating Cash Flow
501.00M	511.00M	686.00M	159.00M	629.00M	548.00M
	Investing Cash Flow
-175.00M	-198.00M	-5.00M	-78.00M	-85.00M	-246.00M
	Financing Cash Flow
-691.00M	-271.00M	-1.20B	-822.00M	-1.31B	-416.00M

Xerox Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price5.34

Price Trends

50DMA

4.88

Positive

100DMA

6.44

Negative

200DMA

7.78

Negative

Market Momentum

MACD

0.23

Negative

RSI

55.31

Neutral

STOCH

25.66

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For XRX, the sentiment is Neutral. The current price of 5.34 is above the 20-day moving average (MA) of 5.04, above the 50-day MA of 4.88, and below the 200-day MA of 7.78, indicating a neutral trend. The MACD of 0.23 indicates Negative momentum. The RSI at 55.31 is Neutral, neither overbought nor oversold. The STOCH value of 25.66 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for XRX.

Xerox Risk Analysis

Xerox disclosed 26 risk factors in its most recent earnings report. Xerox reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Xerox Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MGIC	80 Outperform	$792.95M	21.50	13.58%	3.49%	3.26%	-0.41%
VRNT	72 Outperform	$1.08B	18.07	6.35%	―	-0.13%	263.78%
Sector *	60 Neutral	$11.59B	10.34	-7.15%	2.94%	7.49%	-10.88%
UIS	58 Neutral	$372.39M	―	192.24%	―	-1.72%	82.15%
CNDT	58 Neutral	$359.26M	1.68	30.92%	―	-14.38%	―
CGNT	57 Neutral	$753.38M	―	-6.09%	―	―	―
XRX	42 Neutral	$679.26M	―	-67.27%	16.20%	-7.49%	-575.59%

* Technology Sector Average

Performance Comparison

XRX

Xerox

5.34

-7.29

-57.72%

MGIC

Magic

15.80

5.90

59.60%

UIS

Unisys

5.23

0.54

11.51%

VRNT

Verint Systems

17.62

-13.36

-43.12%

CNDT

Conduent

2.30

-1.24

-35.03%

CGNT

Cognyte Software

10.95

3.53

47.57%

Xerox Earnings Call Summary

Earnings Call Date:May 01, 2025

(Q1-2025)

% Change Since: 21.09%|

Next Earnings Date:Jul 29, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted positive developments in equipment installations, ITsavvy integration, and sales productivity. However, these were offset by revenue declines, reduced operating margins, and significant trade uncertainties impacting costs. While there are positive strategic moves such as the Lexmark acquisition, the current financial challenges create a balanced outlook.

Q1-2025 Updates

Positive Updates

Growth in Equipment Installations and A4 Segment

Equipment installation grew 24% for the third consecutive quarter of double-digit growth. Entry installations grew about 33%, reflecting efforts to gain share in the A4 category.

Progress on ITsavvy Integration

The integration of ITsavvy is running ahead of plan. IT Solutions order volumes and cross-sale opportunities between print and IT Solutions businesses are already ahead of plan.

Sales Force Productivity and Operational Simplification

Sales force productivity advanced 13% year-over-year, driven by simplification and optimization initiatives. Operational simplification efforts included an enterprise-wide contract lifecycle management platform.

Lexmark Acquisition Progress

Regulatory approvals for the Lexmark acquisition are progressing, with several key approvals received. The acquisition is expected to be accretive and support revenue and profit growth.

Negative Updates

Revenue Decline

Revenue of around $1.5 billion decreased 3% in actual currency and 1.1% in constant currency. Organic core revenue declined a little more than 2% in constant currency.

Decline in Adjusted Operating Income Margin

Adjusted operating income margin of 1.5% was lower year-over-year by 70 basis points, reflecting higher product costs and macroeconomic disruptions.

Negative Free Cash Flow

Free cash flow was a use of $109 million compared to a use of $89 million in the prior year, reflecting lower adjusted net income and slightly higher capital expenditures.

Impact of Tariffs and Trade Uncertainty

Tariff and trade-related uncertainty impacted product costs. The expected reduction in operating income net of mitigation measures is around $50 million in 2025.

Company Guidance

During the Q1 2025 earnings call, Xerox Holdings Corporation provided several key metrics regarding their financial performance and strategic initiatives. Revenue for the quarter was approximately $1.5 billion, reflecting a 3% decline in actual currency and a 1.1% decline in constant currency, with adjusted operating income margin decreasing by 70 basis points to 1.5%. Free cash flow was a use of $109 million, compared to a use of $89 million in the prior year, and adjusted loss per share was $0.06, $0.12 lower year-over-year. Equipment revenue adjusted for currency backlog fluctuation and reinvention effects declined approximately 1%, marking a 500 basis point improvement from 2024. The company achieved 24% growth in equipment installations, with services renewal rates at a multi-year high. The integration of ITsavvy has progressed ahead of schedule, with order volumes and cross-sale opportunities between print and IT Solutions outperforming expectations. Xerox also reported a 13% year-over-year increase in sales force productivity, contributing to the improved equipment revenue trajectory. Additionally, the company made significant progress on its reinvention initiatives and geographic simplification programs, which are expected to yield more than $100 million in cost savings in 2025.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.