NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- XRX's revenue growth has slightly outpaced the industry average of 4.3%. Since the same quarter one year prior, revenues slightly increased by 1.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- XEROX CORP has improved earnings per share by 37.5% in the most recent quarter compared to the same quarter a year ago. 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 reported lower earnings of $0.41 versus $0.55 in the prior year. This year, the market expects an improvement in earnings ($1.08 versus $0.41).
- XRX has underperformed the S&P 500 Index, declining 7.33% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- Net operating cash flow has decreased to $347.00 million or 48.82% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
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 10.9, below the average consumer durables industry P/E ratio of 11.1 and below the S&P 500 P/E ratio of 17.7. Xerox has a market cap of $10.7 billion and is part of the
industry. Shares are down 31.9% year to date as of the close of trading on Thursday.
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