Very few brands have the distinction of having their corporate name become “genericized” so that the brand is synonymous with the activity. Google (GOOGL) 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) 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 repurchased $542 million of its common stock from Carl Icahn last year, an activist investor who was able to keep the company public during difficult times. Speaking on the repurchase at the time, 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 under 15x earnings, 0.32x sales, and 0.68x book value.
On top of that, XRX currently pays a 6.1% 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. XRX scores over 95% in this component.
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 has put in some work since late last year, but has now pulled back to around $16 where it should find some support. This could be a great time to pick up shares before it retraces back toward $20.
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XRX shares were trading at $16.32 per share on Tuesday afternoon, down $0.27 (-1.63%). Year-to-date, XRX has declined -10.97%, versus a -0.39% rise in the benchmark S&P 500 index during the same period.
About the Author: Jay Soloff
Jay is a former professional market maker who cut his teeth trading on the floor of the CBOE. With more than 20 years of experience trading and investing, his focus is on making professional strategies accessible to everyone, which is exactly what does in his highly profitable POWR Income and POWR Stocks Under $10 investment advisory services.
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