Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model. 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 attractive valuation levels, good cash flow from operations, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
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- Net operating cash flow has increased to $1,773.00 million or 38.73% when compared to the same quarter last year. In addition, XEROX CORP has also vastly surpassed the industry average cash flow growth rate of -36.68%.
- 36.60% is the gross profit margin for XEROX CORP which we consider to be strong. Regardless of XRX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.65% trails the industry average.
- Despite the weak revenue results, XRX has significantly outperformed against the industry average of 38.5%. Since the same quarter one year prior, revenues slightly dropped by 0.7%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
- XEROX CORP reported flat earnings per share in the most recent quarter. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, XEROX CORP reported lower earnings of $0.88 versus $0.89 in the prior year. This year, the market expects an improvement in earnings ($1.12 versus $0.88).
-- Written by a member of TheStreet Ratings Staff