Are Investors Undervaluing Xerox (XRX) Right Now?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company value investors might notice is Xerox (XRX). XRX is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 8.81. This compares to its industry's average Forward P/E of 14.80. Over the past year, XRX's Forward P/E has been as high as 9.15 and as low as 5.01, with a median of 7.92.
We should also highlight that XRX has a P/B ratio of 1.56. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 2.38. Over the past year, XRX's P/B has been as high as 1.58 and as low as 0.92, with a median of 1.32.
Finally, investors will want to recognize that XRX has a P/CF ratio of 8.84. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 10.04. Over the past 52 weeks, XRX's P/CF has been as high as 13.22 and as low as 5.46, with a median of 8.93.
These are just a handful of the figures considered in Xerox's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that XRX is an impressive value stock right now.
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