Xerox (XRX) Up 10.1% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Xerox Holdings Corporation (XRX). Shares have added about 10.1% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Xerox due for a pullback? 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 drivers. Xerox Misses Q3 Earnings EstimatesXerox reported dismal third-quarter 2024 results, wherein both earnings and revenues missed the Zacks Consensus Estimate.Third-quarter adjusted EPS of 25 cents missed the Zacks Consensus Estimate by 52.8% and declined 45.7% year over year. Total revenues of $1.53 billion missed the consensus mark by 3.6% and decreased 7.5% year over year on a reported basis. Revenues declined 7.3% on a constant-currency (CC) basis.Q3 Revenue Details for XRXPost-sale revenues came in at $1.19 billion, down 6.1% year over year on a reported basis and 5.7% at cc, lagging our estimate of $1.3 billion. Equipment sales declined 12.2% year over year on a reported basis and at cc to $339 million, surpassing our estimate of $330.3 million.The Print and Other segment’s revenues totaled $1.46 billion, down 7.5% year over year and lagging our estimate of $1.55 billion. Xerox Financial Services revenues totaled $88 million, down 10.2% year over year and lagging our estimate of $96.4 million.Sales revenues totaled $588 million, down 8.7% year over year on a reported basis and 8.3% at cc. Services, maintenance and rental revenues totaled $902 million, down 6.2% year over year on a reported basis and 6.1% at cc. Financing revenues of $38 million decreased 17.4% year over year on a reported basis and 17.6% at cc.XRX's Operating PerformanceAdjusted operating income came in at $85 million, up 17.6% on a year-over-year basis. Adjusted operating margin was 5.2%, up 110 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 $521 billion compared with $485 million at the end of the prior quarter. The company’s operating cash flow and free cash flow were $116 million and $107 million, respectively, in the quarter.XRX's 2024 GuidanceXerox lowered its 2024 revenue guidance from 5% to 6% decline to a decline of around 10% at constant currency. The adjusted operating margin expectation has been lowered from at least 6.5% to around 5%. The company now expects free cash flow to be $450 to $500 million compared with the previous anticipation of at least $550 million.How Have Estimates Been Moving Since Then?It turns out, estimates revision have trended downward during the past month.The consensus estimate has shifted -37.2% due to these changes.VGM ScoresCurrently, Xerox has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.Overall, the stock has an aggregate VGM Score of B. 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.Free: 5 Stocks to Buy As Infrastructure Spending SoarsTrillions of dollars in Federal funds have been earmarked to repair and upgrade America’s infrastructure. In addition to roads and bridges, this flood of cash will pour into AI data centers, renewable energy sources and more.In, you’ll discover 5 surprising stocks positioned to profit the most from the spending spree that’s just getting started in this space.Download How to Profit from the Trillion-Dollar Infrastructure Boom absolutely free today.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 ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks