Xerox's (XRX) Q3 Earnings Surpass Estimates, Decrease Y/Y

Zacks Equity Research
·3-min read

Xerox Holdings Corporation XRX reported impressive third-quarter 2020 results, with earnings and revenues beating the Zacks Consensus Estimate.

Adjusted earnings per share of 48 cents beat the consensus mark of 24 cents and declined year over year. Total revenues of $1.77 billion surpassed the consensus mark by 10.6% but declined year over year. The coronavirus pandemic had a significant negative impact on the company’s quarterly results.

Notably, the company’s shares declined 53.2% year to date compared with 20.9% decline of the industry it belongs to.

Other Quarterly Details

Equipment sales revenues totaled $419 million, down 15.2% year over year on a reported basis and 16.1% on a constant-currency basis, contributing 24% to total revenues. Post-sale revenues totaled $1.35 billion, down 20% year over year on a reported basis and 20.7% on a constant-currency basis, contributing 76% to total revenues.

Adjusted operating margin shrunk 460 basis points year over year to 7.4%. Selling, administrative and general expenses, as a percentage of revenues, increased 1.7% year over year to 25.1%. Research, development and engineering expenses, as a percentage of revenues, came in at 4.3%, down from the year-ago quarter’s 4.6%.

Xerox exited the quarter with cash, cash equivalents and restricted cash balance of $3.3 billion compared with $2.3 billion at the end of the prior quarter. Long-term debt was $3.8 billion compared with $2.2 billion at the end of the previous quarter.

The company generated $106 million of cash from continuous operations and free cash flow was $88 million.

Xerox currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Business Services Companies

Equifax Inc. EFX reported third-quarter 2020 adjusted earnings of $1.87 per share that beat the Zacks Consensus Estimate by 16.2% and improved 26.4% on a year-over-year basis. Revenues of $1.07 billion outpaced the consensus estimate by 5.9% and improved 22% year over year.

ManpowerGroup Inc. MAN reported third-quarter 2020 earnings of $1.12 per share, beating the consensus mark by 90.5% but declining more than 37.5% year over year. Revenues of $4.58 billion surpassed the consensus mark by 8.7% but declined 12.7% year over year.

IHS Markit Ltd. INFO recorded third-quarter fiscal 2020 adjusted earnings per share of 77 cents that surpassed the consensus estimate by 11.6% and increased 15% on a year-over-year basis. Total revenues came in at $1.07 billion, marginally surpassing the consensus mark but declining 4% from the year-ago quarter.

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