Seeking Alpha
Profile| Send Message| ()  

Xerox Corporation (XRX) is scheduled to report its Q2 2012 results on July 20, 2012, before the market opens. The street expects EPS and revenue of $0.26 and $5.60B, respectively.

In this article I will recap the historical results of the company, its latest EPS estimates vs. surprises, the latest news from XRX and the news from its closest competitors.

Xerox Corp. Revenue and Net Income History

Recent EPS Actuals vs. Estimates

The company has met or beaten analysts' estimates in the last four quarters. In the last quarter it reported $0.23 EPS, in-line with analyst estimates.

Xerox Corp. EPS Historical Results vs Estimates

The consensus EPS estimate is $0.26 based on 8 analysts' estimates, just below $0.27 a year ago. Revenue estimates are $5.60B, just below $5.61B a year ago. The median target price by analysts for the stock is $8.50.

Average recommendation: Overweight

Source: Marketwatch

Latest News

  • On July 11, 2012, Xerox Corporation announced that it has signed a definitive agreement to acquire WDS, a firm that provides technical support, knowledge management and related consulting to wireless telecommunication brands.
  • On July 2, 2012, Xerox Corporation announced the acquisition of Lateral Data, a e-discovery technology provider, for $30 million. Lateral Data`s flagship software, Viewpoint, brings simplicity and affordability to e-discovery by enabling corporate legal departments and law firms to manage the entire e-discovery lifecycle using a single, in-house solution.
  • On June 26, 2012, Xerox Corporation announced that Florida Health Choices, a corporation established by the state to improve access to health care, has selected Xerox to administer Insurance Marketplace, a program designed to give small business and eligible individuals more flexibility in finding affordable health insurance and other services.
  • On June 18, 2012, Xerox Corporation announced that it has been selected as a prime contractor to the National Institutes of Health (NIH), supporting the information technology and business process needs of the federal healthcare marketplace.
  • On June 7, 2012, Xerox Corporation announced that the state of Illinois has turned to Xerox to support a program that helps people in need make ends meet. Under a five-year contract valued at $42 million with the option for a five-year renewal, Xerox will provide the state with electronic benefit transfer (EBT) services to distribute benefits for the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps), as well as cash assistance on a reloadable card.
  • On June 5, 2012, Thin Film Electronics ASA announced that it has extended its relationship with PARC, a Xerox Corp's Company, for the delivery of integrated printed electronic systems.
  • On April 23, 2012, Xerox Corporation announced that it expects second-quarter 2012 GAAP earnings of $0.21 to $0.24 per share (EPS) and adjusted EPS is expected to be $0.25 to $0.28 per share including 1 cent to 2 cents of restructuring.
  • On March 27, 2012, BM&FBovespa (Bovespa) announced that, on April 4, 2012, the Brazilian Depositary Receipts (BDRs) Level I of Xerox Corporation will start being traded on Bovespa's over-the-counter (OTC) market, quoted in BRL per unit and with standard trading lot of 100 BDRs, under the ticker XRXB11B.
  • On March 15, 2012, Xerox Corporation announced that it has closed on its offering of $600 million of senior unsecured floating rate notes due in 2013 and $500 million of 2.95% senior unsecured notes due in 2017.
  • On February 15, 2012, Xerox Corporation's Global Imaging Systems announced that it has acquired Iowa-based company, RK Dixon, a provider of IT services, copiers, printers and managed print services with locations in seven Iowa and Illinois cities.
  • On January 25, 2012, Xerox Corporation announced that it expects first-quarter 2012 GAAP earnings of $0.17 to $0.20 per share. First-quarter adjusted EPS is expected to be $0.21 to $0.24 per share.

FCFF Valuation

On May 17, 2012, I have published an article which says that Xerox looks highly undervalued. The article explains the FCFF valuation with all the assumptions required for calculations which come to conclusion of $12.40 price of the share.

However, it all comes down to the assumptions and the main one here is "I predict 2% growth for the next four years". The market currently is discounting the stock much more. I would agree that this assumption is on the optimistic side, considering the management and competitive environment.

Competitors

Accenture (ACN), Canon (CAJ), Hewlett-Packard (HPQ), and International Business Machines Corporation (IBM) are considered major competitors for Xerox and the table below provides the key metrics for these companies and the industry.

Xerox Corp. key ratio comparison with direct competitors

The chart below compares the stock price changes as a percentage for the selected companies and S&P 500 index for the last one year period.

(click to enlarge)XRX Chart

XRX data by YCharts

Competitors' Latest Development

  • On July 9, 2012, Hewlett Packard Co's HP Enterprise Services announced that the Delaware Division of Medicaid & Medical Assistance (DMMA) has signed a $50 million agreement for HP to continue providing Medicaid fiscal-agent services for three years.
  • On July 5, 2012, Accenture PLC announced a management consulting contract with the Ministry of Agriculture, Forestry and Fisheries for a project to improve food supply capabilities in natural disasters and emergencies.
  • On July 3, 2012, Sandvik AB announced that it has entered into a five year strategic agreement, to a value of 2 billion SEK, with International Business Machines Corp and will outsource parts of the IT infrastructure services.
  • On June 28, 2012, Accenture PLC announced that for the fourth quarter of 2012, it expects net revenues to be in the range of $6.60 billion to $6.85 billion. For fiscal 2012, it expects revenue growth to be in the range of 10% to 12% in local currency and updated and narrowed its range for diluted EPS to $3.80 to $3.84 from its previously guided range of $3.82 to $3.90. The Company reported revenues of $25.5 billion in fiscal 2011.
  • On June 27, 2012, Hewlett Packard Co announced that Lifescript, a publisher dedicated to educating women about family health issues, has selected HP 3PAR Storage, a core component of the HP Converged Infrastructure strategy, to support increased storage capacity demands and analytic-based decision making to improve the customer experience.
  • On June 27, 2012, Reuters reported that Hewlett Packard Co told a judge on June 26, 2012, that Oracle Corporation should be ordered to make its software available on HP's Itanium-based servers for as long as HP sells them.
  • On June 27, 2012, International Business Machines Corp and Lawrence Livermore National Laboratory (LLNL) announced that they are broadening their nearly 20-year collaboration in high performance computing (HPC) by joining forces to work with industrial partners to help boost their competitiveness in the global economy.
  • On June 27, 2012, International Business Machines Corp and Veolia Transdev announced that together they are developing a smarter mobility solution designed to help cities alleviate road congestion, optimize transportation infrastructures and improve the urban traveler experience.
  • On June 27, 2012, Accenture PLC announced that it has been selected by the State of California, following a competitive bid process, to implement a statewide health insurance exchange, the California Healthcare Enrollment, Eligibility and Retention System (CalHEERS).
  • On June 26, 2012, Hewlett Packard Co announced that Verizon, Vodafone and Mobile TeleSystems OJSC (MTS) have signed new technology agreements for the supply and delivery of industry standard servers.
  • On June 25, 2012, Guardia Civil, the police force in Spain, has selected Accenture PLC to oversee the integration of 12 additional information sources, into the operations management system and police investigations system used by the force.
  • On June 23, 2012, Reuters reported that Hewlett Packard Co may cut as many as 1,000 jobs in Germany as part of planned European-wide redundancies, WirtschaftsWoche reported.
  • On June 18, 2012, Hewlett Packard Co's HP Enterprise Services announced that Procter & Gamble (P&G) has signed a multiyear agreement for HP to help provide an Always On operating environment that enables the consumer-goods to keep products moving on time, from production all the way to shoppers' carts in the retail store.
  • On June 13, 2012, International Business Machines Corp announced that it has completed acquisition of Tealeaf Technology, Inc. Terms of the transaction were not disclosed.
  • On June 13, 2012, Accenture PLC announced that it has been selected by Wing Lung Bank, a wholly owned subsidiary of China Merchants Bank, to plan and oversee the implementation of its new core banking technology system as part of the bank's broad business transformation program.
  • On June 11, 2012, Canon Inc. announced plans to launch digital camera production in Brazil through the establishment of Canon Indústria de Manaus Ltda., located in the state of Amazonas.
  • On June 7, 2012, Accenture PLC announced the renewal of its contract, through March 31, 2013, with the Japan Pension Service to continue to provide management support to improve the accuracy of pension records.
  • On June 7, 2012, International Business Machines Corp announced that Sree Charan Souharda Cooperative Bank has selected IBM SmartCloud to help it meet growing demand, add new customer services and to centralize mission-critical operations such as real-time transaction processing across its five branches in Bangalore.
  • On June 6, 2012, The National Institutes of Health (NIH) has selected Accenture Plc's Accenture Federal Services as one of the prime contractors to provide technology services under a 10 year, $20 billion indefinite-delivery, indefinite-quantity (IDIQ) contract.
  • On June 5, 2012, The Government of India Department of Electronics and Information Technology (DeitY) announced that it has selected Accenture to review investment proposals from global technology providers and investors interested in building semiconductor fabrication units (fabs) in India.
  • On June 4, 2012, Accenture PLC announced that it has signed a five-year application development and maintenance services agreement with Nordea, the financial services group in the Nordic and Baltic Sea region.
  • On June 4, 2012, Reuters reported according to a lawyer for Hewlett Packard Co said in court that Oracle Corp violated a clear contract with Hewlett Packard Co when it decided it would no longer make new versions of its database software compatible with HP's Itanium-based servers.
  • On May 30, 2012, Hewlett Packard Co's HP Enterprise Services announced the Oklahoma State and Education Employees Group Insurance Board (OSEEGIB) has signed a contract for HP to continue providing claims processing and other services.
  • On May 29, 2012, Hewlett Packard Co announced that it has amicably resolved patent litigation with Brazil-based Multilaser Industrial Ltda. relating to HP's integrated printhead inkjet cartridges.
  • On May 29, 2012, International Business Machines Corp announced it has completed the acquisition of Vivisimo, provider of federated discovery and navigation software that helps organizations access and analyze big data.
  • On May 23, 2012, Hewlett Packard Co announced that for the third quarter of 2012, it estimates non-GAAP diluted EPS to be in the range of $0.94 to $0.97 and GAAP diluted EPS to be in the range of $0.00 to $0.03. Third quarter fiscal 2012 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.94 per share, related primarily to the amortization and impairment of purchased intangible assets, restructuring charges, and acquisition-related charges.
  • On May 23, 2012, Hewlett Packard Co outlined plans for a multi-year productivity initiative designed to simplify business processes, advance innovation and deliver better results for customers, employees and shareholders.
  • On May 23, 2012, International Business Machines Corp announced it has completed the acquisition of Varicent Software Incorporated, provider of analytics software for compensation and sales performance management.
  • On May 21, 2012, International Business Machines Corp announced that The U.S. General Services Administration has awarded a contract to the Company to develop and install advanced smart building technology in 50 of the federal government's highest energy-consuming buildings.
  • On May 18, 2012, Hewlett Packard Co announced that the Board of Directors have declared a regular cash dividend of $0.132 per share on the Company's common stock. The dividend, the third in the Company's fiscal year 2012, is payable on July 5, 2012, to stockholders of record as of the close of business on June 13, 2012.
  • On May 17, 2012, Reuters reported that Hewlett Packard Co, is considering cutting its workforce by 8% to 10% or a minimum of 25,000 jobs, sources familiar with the matter told Reuters.
  • On May 15, 2012, Reuters reported that Hewlett Packard Co on Monday lost a battle with the U.S. Internal Revenue Service for more than $190 million in tax refunds tied to a Dutch tax shelter designed by the derivatives arm of American International Group.
  • On May 7, 2012, International Business Machines Corp And Banco de Credito del Peru announced a five-year agreement for IT outsourcing services. The agreement will enable BCP to optimize its operational expenses, relying on IBM to provide IT infrastructure management services, including support, operation and maintenance of the bank's mainframe, midrange and storage platforms.
  • On May 3, 2012, International Business Machines Corp and the Department of Science and Technology (DOST) of the Republic of the Philippines today signed a Memorandum of Understanding (MOU) to work together to establish the first Philippine Systems & Technology R&D Laboratory to help spur economic growth.
  • On May 3, 2012, Reuters reported that an Oracle Corporation attorney ruled out a settlement with Hewlett-Packard Co (HP) in a bitter lawsuit over the Itanium microprocessor, a day after the judge refused to resolve the case for either side before trial.
  • On May 2, 2012, International Business Machines Corp announced a definitive agreement to acquire Tealeaf Technology, Inc., a provider of customer experience analytics software that helps organizations to gain intelligence and react more swiftly to consumer trends in digitally transformed marketplace.
  • On April 27, 2012, International Business Machines Corp announced that The Sunan Kalijaga Islamic State University (UIN) Yogyakarta has adopted IBM's smarter computing approach to IT to improve the quality of the education process through highly collaborative learning services.
  • On April 25, 2012, International Business Machines Corp announced a definitive agreement to acquire Vivisimo, a provider of federated discovery and navigation software that helps organizations access and analyze big data across the enterprise.
  • On April 25, 2012, International Business Machines Corp and Bauman Moscow State Technical University announced the opening of a Smarter Cities Development and Education Center in Russia - the first of its kind in the region.
  • On April 24, 2012, International Business Machines Corp announced that its Board of Directors declared a regular quarterly cash dividend of $0.85 per common share, payable June 9, 2012 to stockholders of record May 10, 2012.
  • On April 23, 2012, Hewlett Packard Co announced that women's clothing retailer Chico's has chosen HP Performance Optimized Data Center (POD) technology as part of an HP Converged Infrastructure to increase productivity by providing employees at more than 600 boutiques nationwide with access to the Company's virtual private cloud.
  • On April 19, 2012, Reuters reported that Hewlett Packard Co agreed to build a printer factory in the southwestern Chinese city of Chongqing, China Daily reported. HP has no plans to reduce its workforce in China after the firm said last month it will merge its printer and PC businesses.

Technical Overview


The stock has a market capitalization of $9.80B and is currently trading at $7.27 with a 52 week range of $6.55 - $10.41. The stock's year-to-date performance has been -7.62%. It is currently trading below 20, 50 and 200 SMA.

Sources: Yahoo Finance, Google Finance, Marketwatch, Finviz, Reuters.

Source: Xerox: Earnings Preview