Critical Contrast: Xerox (XRX) versus Its Rivals

Xerox (NYSE: XRX) is one of 22 publicly-traded companies in the “Computer peripheral equipment, not elsewhere classified” industry, but how does it contrast to its competitors? We will compare Xerox to similar businesses based on the strength of its valuation, profitability, institutional ownership, earnings, risk, analyst recommendations and dividends.

Profitability

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This table compares Xerox and its competitors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Xerox 1.67% 17.13% 5.50%
Xerox Competitors -12.20% -13.19% -2.68%

Earnings and Valuation

This table compares Xerox and its competitors top-line revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Xerox $10.27 billion $195.00 million 8.61
Xerox Competitors $1.45 billion $9.02 million 20.50

Xerox has higher revenue and earnings than its competitors. Xerox is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.

Dividends

Xerox pays an annual dividend of $1.00 per share and has a dividend yield of 3.3%. Xerox pays out 28.7% of its earnings in the form of a dividend. As a group, “Computer peripheral equipment, not elsewhere classified” companies pay a dividend yield of 2.1% and pay out 31.7% of their earnings in the form of a dividend. Xerox has increased its dividend for 5 consecutive years. Xerox is clearly a better dividend stock than its competitors, given its higher yield and lower payout ratio.

Volatility & Risk

Xerox has a beta of 1.19, indicating that its share price is 19% more volatile than the S&P 500. Comparatively, Xerox’s competitors have a beta of 0.61, indicating that their average share price is 39% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and target prices for Xerox and its competitors, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Xerox 0 2 7 0 2.78
Xerox Competitors 135 733 1393 49 2.59

Xerox presently has a consensus target price of $35.81, suggesting a potential upside of 19.45%. As a group, “Computer peripheral equipment, not elsewhere classified” companies have a potential upside of 4.81%. Given Xerox’s stronger consensus rating and higher possible upside, equities analysts plainly believe Xerox is more favorable than its competitors.

Insider and Institutional Ownership

85.8% of Xerox shares are owned by institutional investors. Comparatively, 51.0% of shares of all “Computer peripheral equipment, not elsewhere classified” companies are owned by institutional investors. 0.3% of Xerox shares are owned by company insiders. Comparatively, 16.1% of shares of all “Computer peripheral equipment, not elsewhere classified” companies are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

Xerox beats its competitors on 12 of the 15 factors compared.

About Xerox

Xerox Corporation designs, develops, and sells document management systems and solutions worldwide. It offers managed document services, including managed print services and multi-channel communication services, as well as a range of digital solutions, such as workflow automation services, content management, and digitization services. The company also provides desktop monochrome and color printers, and multifunction printers; copiers, digital printing presses and light production devices, and solutions; graphic communications and commercial printers; inkjet presses; and FreeFlow portfolio of software solutions for the automation and integration of print jobs processing. In addition, it sells paper products, wide-format systems, and global imaging systems network integration solutions. The company sells its products and services directly to its customers through sales force, as well as through independent agents, dealers, value-added resellers, systems integrators, and the Web. Xerox Corporation was founded in 1906 and is headquartered in Norwalk, Connecticut.

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