Xerox Holdings Corp (XRX, Financial) has recently witnessed a notable uptick in its stock performance. With a current market capitalization of $2.16 billion, the company's shares are trading at $17.55, marking a 5.19% gain over the past week. This positive momentum extends over the past three months, with a substantial 32.56% gain. When assessed against the GF Value of $20.13, Xerox is currently considered modestly undervalued, a shift from its previous label as a possible value trap where investors were advised to think twice. This change in valuation suggests that Xerox may now present a more attractive opportunity for investors.
Company Overview
Xerox Holdings Corp, a stalwart in the software industry, is primarily known for its original equipment manufacturing and software solutions. The company's operations are streamlined into a single segment that focuses on the design, development, and sale of printing technology and related services. Xerox has a significant market presence, with 60% of its revenue generated from the U.S. and the remaining 40% from international markets. Its product portfolio includes multifunction printers (MFPs) that cater to the needs of large enterprise markets. Additionally, Xerox offers managed print services, which optimize the efficiency of print and copy equipment usage. The company is also exploring new market territories such as digital print packaging solutions and printed electronics.
Profitability Insights
Xerox's profitability is commendable, with a Profitability Rank of 6/10. The company's operating margin stands at 6.15%, outperforming 59.05% of 2,752 companies in the industry. Its return on equity (ROE) is 5.55%, higher than 57.06% of its peers, while the return on assets (ROA) at 1.64% and return on invested capital (ROIC) at 4.45% also surpass industry medians. Over the past decade, Xerox has maintained profitability for seven years, a testament to its financial resilience and operational efficiency.
Growth Trajectory
The Growth Rank for Xerox is currently at 2/10, reflecting some challenges in its growth metrics. The company's 3-year revenue growth rate per share is 3.70%, which is better than 37.94% of companies in the sector. However, the 5-year revenue growth rate per share is a modest 1.70%. Looking ahead, the estimated total revenue growth rate for the next 3 to 5 years is projected at -1.93%. On a more positive note, the estimated EPS growth rate for the same period is 21.87%, indicating potential for earnings improvement despite revenue concerns.
Notable Shareholders
Among the notable investors holding Xerox shares, Chuck Royce (Trades, Portfolio) leads with 479,042 shares, representing a 0.39% stake in the company. Jeremy Grantham (Trades, Portfolio) follows with 115,444 shares, and Ray Dalio (Trades, Portfolio) holds 109,815 shares, each owning 0.09% of the company. These investments by prominent investors underscore a level of confidence in Xerox's market position and future prospects.
Competitive Landscape
Xerox operates in a competitive environment, with key players such as Perficient Inc (PRFT, Financial) with a market cap of $2.52 billion, NCR Voyix Corp (VYX, Financial) at $2.2 billion, and N-able Inc (NABL, Financial) at $2.46 billion. These companies, with market capitalizations close to that of Xerox, represent the competitive dynamics within the software industry where Xerox operates.
Conclusion
In summary, Xerox Holdings Corp has experienced a significant stock price increase of 33% over the past three months, transitioning from a possible value trap to being modestly undervalued according to the GF Value. The company's profitability remains strong, with solid margins and returns on equity, assets, and invested capital. While growth ranks are low, future earnings projections offer a glimmer of hope. With notable investors maintaining their stakes and a competitive position within the industry, Xerox may continue to attract investor interest as it navigates its growth and profitability challenges.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
