Very few brands have the distinction of having their corporate name become “genericized” so that the brand is synonymous with the activity. Google (GOOGL – Get Rating) is perhaps the most well known today, with the phrase “Google It” meaning any internet search.
Unless you’re of a certain age, you may not know the term “Make a Xerox”. And while documents are still being “Xeroxed” (or copied) the namesake company, Xerox (XRX – Get Rating) is much more than a paper company these days.
Today’s Xerox has evolved into a printer and printer solutions company, with a focus on software, document security, and even a VR (virtual reality) offering that let’s IT personnel remotely view and diagnose physical issues from any location. The software is compatible with iOS and Android so workers can run it on their phones.
Notably, the company recently repurchased $542 million of its common stock from Carl Icahn, an activist investor who was able to keep the company public during difficult times. Speaking on the repurchase, Steve Bandrowczak, Xerox CEO stated, “Our decision to repurchase shares is reflective of the confidence we have in our business, our strategy and our ability to improve Xerox profitability and cash performance.”
Since the company has shifted gears and diversified its business outward from just copy machines, it appears to have fallen off investor’s radar. It’s currently trading at just 8.2x earnings, 0.31x sales, and 0.66x book value.
On top of that, XRX currently pays a 7% dividend, and rates a B overall in our POWR Ratings. Its highest component score is, not surprisingly, in the Value component, given the high dividend and the low earnings valuation.
Xerox has been working diligently to strengthen its balance sheet over the past year, and the large share repurchase while maintaining the current dividend, which was not part of its regular repurchase program, is a great indicator of the track the company is on.
The stock is at the low end of a trading range it’s been in over the past year, between $13.50-$14 and $17-18. This could be the bottom for a run back to the high teens.
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XRX shares were trading at $14.57 per share on Tuesday afternoon, up $0.15 (+1.04%). Year-to-date, XRX has gained 4.97%, versus a 15.06% rise in the benchmark S&P 500 index during the same period.
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