NEW YORK (TheStreet) -- Xerox (XRX) shares closed trading up 0.97% to $11.48 on Monday after the business process and document management solutions provider announced that it was purchasing Health Communities Institute for an undisclosed sum today.
Health Communities Institute is a Berkley,CA-based cloud platform company that allows its clients quick search capabilities of patients' socioeconomic and healthcare information.
"The Affordable Care Act and demand for improved quality of care are factors driving opportunities for Xerox, and population-based insights are critical as the healthcare system shifts to a value-based model," said Senior VP of of Xerox subsidiary Midas, Justin Lanning. "With this acquisition, we are enriching our healthcare business, evolving our offerings and innovating to address market changes. Our clients will be able to identify at-risk populations, which will lead to timelier and more personalized clinical interventions. This can reduce costs and improve care."
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 several positive factors, 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 reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is somewhat low, currently at 0.72, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.88 is somewhat weak and could be cause for future problems.
- 36.83% 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 5.03% trails the industry average.
- Despite the weak revenue results, XRX has outperformed against the industry average of 22.5%. Since the same quarter one year prior, revenues slightly dropped by 6.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- XEROX CORP's earnings per share declined by 27.3% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past two years indicate the company has sound management over its earnings and share float. We anticipate the company beginning to experience more growth in the coming year. During the past fiscal year, XEROX CORP's EPS of $0.89 remained unchanged from the prior years' EPS of $0.89. This year, the market expects an improvement in earnings ($0.98 versus $0.89).
- You can view the full analysis from the report here: XRX Ratings Report