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TheStreet Open House

One Factor Driving Xerox (XRX) Down Today

Stock quotes in this article: XRX

NEW YORK (TheStreet) -- Xerox  (XRX) fell Monday amid the company's announcement that Lynn Blodgett would step down as president at the end of 2014. Robert Zapfel, a 35-year veteran of IBM  (IBM), will succeed Blodgett and will report to chairman and CEO Ursula Burns as an executive vice president.

Blodgett will remain with the company as an executive vice president.

The stock dipped to a one-day low of $10.74 in the wake of the news.

"Bob Zapfel brings to Xerox extensive experience in global services with an emphasis on transforming complex operations to customer focused, profitable and sustaining businesses," Burns said in a statement. "His deep industry knowledge will help drive Xerox Services' Five-Plank Strategy to increase customer value and improve our competitiveness and margins."

"I'm encouraged by the company's strategy to build sustainable value for all its stakeholders. In a very short time, Xerox has built a great collection of services assets and market leading positions in attractive areas, with a strong base of clients," Zapfel said in a statement. "It's a thrill to be part of this historic and strategic change and to be given an opportunity to join this strong institution that pushes itself to make its clients more competitive and successful."

Brean Capital calls Monday's sell-off a buying opportunity because of Zapfel's background at IBM. The firm reiterated its "buy" rating and set a $13 target price.

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TheStreet Ratings team rates XEROX CORP as a "buy" with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate XEROX CORP (XRX) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, XRX's share price has jumped by 25.11%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, XRX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The debt-to-equity ratio is somewhat low, currently at 0.63, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.18, which illustrates the ability to avoid short-term cash problems.
  • XEROX CORP' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, XEROX CORP increased its bottom line by earning $0.93 versus $0.88 in the prior year. This year, the market expects an improvement in earnings ($1.13 versus $0.93).
  • Despite the weak revenue results, XRX has outperformed against the industry average of 20.8%. Since the same quarter one year prior, revenues slightly dropped by 3.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: XRX Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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