Why Is Xerox (XRX) Down 19.6% Since Last Earnings Report?

A month has gone by since the last earnings report for Xerox Holdings Corporation (XRX). Shares have lost about 19.6% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Xerox due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts. Xerox Misses Q4 Earnings EstimatesXerox reported mixed fourth-quarter 2024 results, wherein earnings missed the Zacks Consensus Estimate, while revenues surpassed the same.Fourth-quarter adjusted EPS of 36 cents missed the Zacks Consensus Estimate by 30.8% and declined 16.3% year over year. Total revenues of $1.5 billion surpassed the consensus mark by 1.5% but decreased 8.6% year over year on a reported basis. Revenues declined 8% on a constant-currency (CC) basis.Q4 Revenue Details for XRXPost-sale revenues came in at $1.22 billion, down 6.7% year over year on a reported basis and 6.1% at cc, surpassing our estimate of $1.21 billion. Equipment sales declined 14.2% year over year on a reported basis and 13.4% at cc to $393 million, beating our estimate of $378.7 million.The Print and Other segment’s revenues totaled $1.54 billion, down 8.7% year over year and surpassing our estimate of $1.51 billion. Xerox Financial Services revenues totaled $89 million, down 11% year over year and lagging our estimate of $98.5 million.Sales revenues totaled $656 million, down 9% year over year on a reported basis and 7.9% at cc. Services, maintenance and rental revenues totaled $924 million, down 7.6% year over year on a reported basis and 7.3% at cc. Financing revenues of $33 million decreased 25% year over year on a reported basis and 24% at cc.XRX's Operating PerformanceAdjusted operating income came in at $104 million, up 6.4% on a year-over-year basis. Adjusted operating margin was 6.4%, up 100 basis points year over year.XRX's Key Balance Sheet and Cash Flow FiguresXerox exited the quarter with a cash and cash equivalent balance of $576 billion compared with $521 million at the end of the prior quarter. The company’s operating cash flow and free cash flow were $351 million and $334 million, respectively, in the quarter.XRX's 2024 GuidanceXerox expects low single-digit revenue growth at constant currency. Adjusted operating margin expectation is at least 5%. The company expects free cash flow to be $350 to $400 million.How Have Estimates Been Moving Since Then?It turns out, fresh estimates have trended downward during the past month.The consensus estimate has shifted -63.64% due to these changes.VGM ScoresCurrently, Xerox has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Xerox has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Xerox Holdings Corporation (XRX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks