Are Investors Undervaluing Xerox (XRX) Right Now?

Zacks Equity Research
·2-min read

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company value investors might notice is Xerox (XRX). XRX is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 7.26, which compares to its industry's average of 16.35. Over the last 12 months, XRX's Forward P/E has been as high as 12.89 and as low as 6.69, with a median of 9.09.

Finally, we should also recognize that XRX has a P/CF ratio of 8.18. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 19.46. Over the past 52 weeks, XRX's P/CF has been as high as 9.58 and as low as 4.38, with a median of 5.84.

These are just a handful of the figures considered in Xerox's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that XRX is an impressive value stock right now.

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