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Xerox Corporation Stock Upgraded (XRX)

NEW YORK ( TheStreet) -- Xerox Corporation (NYSE: XRX) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, attractive valuation levels, notable return on equity and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:

  • XEROX CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, XEROX CORP increased its bottom line by earning $0.89 versus $0.41 in the prior year. This year, the market expects an improvement in earnings ($1.14 versus $0.89).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Office Electronics industry. The net income increased by 119.3% when compared to the same quarter one year prior, rising from $171.00 million to $375.00 million.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Office Electronics industry and the overall market on the basis of return on equity, XEROX CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 6.6%. Since the same quarter one year prior, revenues slightly dropped by 0.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
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Xerox Corporation engages in the development, manufacture, marketing, service, and finance of document equipment, software, solutions, and services worldwide. The company operates in three segments: Technology, Services, and Other. The company has a P/E ratio of 7.4, below the average consumer durables industry P/E ratio of 11.7 and below the S&P 500 P/E ratio of 17.7. Xerox has a market cap of $12.03 billion and is part of the consumer goods sector and consumer durables industry. Shares are up 5.2% year to date as of the close of trading on Wednesday.

You can view the full Xerox Ratings Report or get investment ideas from our investment research center.
-- Written by a member of TheStreet RatingsStaff

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