Xerox Inc. (XRX) Stock | Time To Reevaluate

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Xerox Corporation (NYSE: XRX)

 

Earnings Report

Today before the open, Xerox Inc (XRX) reported earnings that fell shy of analyst estimates and sent shares south. They reported earnings of 24 cents per share on $4.33 billion in revenues compared to same period last year of 26 cents on $4.8 billion in revenues. Analyst polled at Thomson Reuters estimated 23 cents per share on $4.54 billion in revenues. XRX also lowered guidance for fourth quarter with expectations at 23-25 cents per share compared to original estimates of 28-30 cents per share. This is the first quarterly loss since 2010 and is in part due to a fee charged for the interrupted government health-care projects in California and Montana, mainly settlement charges. XRX is traditionally known as being a printer/paper company but as the company evolves and diversifies its business portfolio we may see more opportunity for growth in the future. CEO Ursula Burns stated that they will be “undertaking a comprehensive review of structural options for the company’s portfolio is the right decision at this time.” MarketWatch

As XRX continues to struggle with their current business model and the effects of the strong USD, I would expect selling to continue in the stock. They haven’t really given it any reason to reverse the trend it’s been in for over a year and until they do, their share price will remain under pressure. I’ll be sitting on the sidelines until there is a catalyst that gets this stock to break that trend, which may be a while as they continue to explore more opportunities. Currently analysts have an average price target of $12.65.

 

XRX Technicals

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XRX’s initial response to earnings was a pop up in the premarket session that was soon ended when the sellers stepped in and sent the share prices down quickly. Shares opened the day up just shy of a percent at $10.43 and immediately sold off at the open and finally hit lows at $9.93 before closing at $10.03 for the day, a 2.9% decrease from yesterdays close at $10.34. This chart on both the long term and short term are looking very bearish as it continues to struggle to find momentum to the upside. We’ll want to wait and see if prices test the yearly low at $9.45 again and if they will be able to hold it or not.

 Looking at the daily chart over the past year you’ll see that XRX has been in a steady downtrend with a Death Cross appearing on the chart back in March. This is one of the more bearish charts I’ve looked at lately, however it does look like a bottom was put in around the $9.45 level with a higher low above the $10 level, so we’ll have to watch and see if that holds. The nice thing about charts that are trending is they usually have much cleaner levels. Looks like we’ll have resistance coming in at the $10.60 and the $11.40 levels while support will be met at $10 and the lows on the year at $9.45. The shorter time-framed moving averages are all flat lining while the 200 day, currently sitting at $11.66, is still heading south.

 

Company Profile

Xerox Corp. provides business process and document management solutions. The company provides document technology, services, software and supplies for graphic communication and office printing environments of any size. It operates through three segments: Services, Document Technology and Other. The Services segment is comprised of business process outsourcing and document outsourcing. The Business process outsourcing provides multi-industry offerings such as customer care, transaction processing, finance and accounting, and human resources, as well as industry focused offerings in areas such as healthcare, transportation, financial services, retail and telecommunications. The Document outsourcing includes managed print services and communication and marketing services. The Document Technology segment includes the sale of products and supplies, as well as the associated technical service and financing of those products, which are not related to document outsourcing contracts. The Document Technology business is centered around strategic product groups that share common technology, manufacturing and product platforms. The strategic product groups are: Entry, Mid-Range and High-End. The Other segment includes paper sales in developing market countries, wide-format systems, licensing revenue, Global Imaging Systems network integration solutions and non-allocated corporate items, including Other expenses, net. Xerox was founded in 1906 and is headquartered in Norwalk, CT. MarketWatch

 

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