The document equipment company reported last month fourth-quarter earnings of $375 million, or 26 cents a share, an increase from year-earlier earnings of $171 million, or 12 cents.
"We believe the stock is weak because of 4Q11 results being at the low end of the company's guidance, significant reduction in 2012 outlook, and perception that Xerox lacks exciting growth opportunities," Gabelli analysts wrote in a Jan. 26 report. "While we don't see near-term upsides, we believe Xerox can continue to demonstrate its robustness in terms of at least single digit growth in top line and stable operating cash flow generation. We are maintaining our long-term BUY recommendation on Xerox."Shares of Xerox were upgraded to buy from hold on Thursday by TheStreet Ratings. "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," TheStreet Ratings wrote. "We feel these strengths outweigh the fact that the company shows low profit margins." Xerox has an estimated price-to-earnings ratio for next year of 6.67; the average for electronic and office equipment companies is 7.77. For comparison, Pitney Bowes (PBI) has a forward P/E of 8.88. Of the 12 analysts who cover Xerox, six rated it a buy. Five analysts gave it a hold rating and one rated it a sell. TheStreet Ratings gives Xerox a B grade with a $9.67 price target. The stock closed Wednesday at $8.33 and has risen 4.65% year to date.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV