Stockchase Opinions

Lorne Steinberg Xerox XRX-N TOP PICK May 16, 2017

An amazing company. They recently spun off Conduint, their business process outsourcing business. The new management team is merging the old Xerox document management business with high technology. There has been a slew of new products out, aimed at the largest global companies to the small and midsized businesses. This has always been a big free cash flow generator. It is totally ignored by the street, which is why it is trading for less than 9X earnings. Dividend yield of 3.5%. (Analysts’ price target is $8.25.)

$7.140

Stock price when the opinion was issued

misc industrial products
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COMMENT

Doesn't know the company well. There's support in the mid/low-$20's. $22-32 is the range. So you can buy and sell within that channel.

BUY
It's hitting new highs. Big cash flow, buying back stocks and raising their dividend. They're also developing new products, trading around 9x cash flow. All this in a slowly declining business. A defensive stock that he really likes.
HOLD
It is a defensive company with a fantastic management team. They are in a no growth world for them. It is trading at 9 times earnings, massive free cash flow, huge share buybacks and increasing dividend. He thinks it will outperform in tough times.
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Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

TOP PICK
Stockchase Research Editor: Michael O'Reilly XRX has been a laggard during the pandemic as office workers have been remotely working. As employees begin a return to the office environment demand for the company's products will begin to return. Meanwhile the stock is quietly building a solid foundation. Carl Icahn has been accumulating shares steadily through August and purchased another $3 million worth of the stock so far in September. In its latest earnings the company produced $0.15 EPS, when analysts expected a breakeven, even in the face of a 35% drop in revenues. An area of future growth is in their liquid metal 3D printing solution -- allowing companies to manufacture much needed parts with off the shelf alloys. On a measured move basis, we see upside to $25 -- almost 30% upside. It is trading at 74% of book value, with a low historic PE, and offers an attractive yield that is backed by a 28% payout ratio. We would trade this with a $15 stop loss. Yield 5.20% (Analysts’ price target is $18.25)
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Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

PAST TOP PICK
(A Top Pick Sep 17/20, Up 17.8%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with XRX is progressing well. We are recommending trailing up the stop to $21 (currently at $15). This will all but guarantee a minimum return exceeding 7%, based on our initial recommended entry.
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This is a Panic-proof Portfolio opinion which is available only for Premium members

Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

PAST TOP PICK
(A Top Pick Sep 17/20, Up 12.7%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with XRX has triggered our stop at $$21. We recommend covering the remaining position at this point. Combined with the recommendation to cover 50% back in December, this has achieved an overall return of 12.7%.
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Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

TOP PICK
Stockchase Research Editor: Michael O'Reilly XRX is the US leader in print management services, holding over 20% of the market share. Along with that success, the company has been accelerating its digital presence and automation processes, 3D printing and cleantech. Recently reported EPS of $0.47 easily beat analyst calls for $0.37. Revenues were up 22% and margins expanded, creating a jump of $198 million in free cash flow. One can only expect these to expand further as schools and businesses return post-pandemic. It trades at 17x earnings compared to peers at 40x and is trading under book value. It pays an excellent dividend, backed by a payout ratio that is under 75% of cash flow (under 45% based next year earnings expectations). We would buy this with a stop loss at $18.50, looking to achieve $30 -- upside potential over 22%. Yield 4.17% (Analysts’ price target is $53.75)
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This is a Panic-proof Portfolio opinion which is available only for Premium members

Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

TOP PICK
Stockchase Research Editor: Michael O'Reilly We reiterate XRX as a TOP PICK. The US leader in print management services, holds over 20% of the market share. Along with that success, the company has been accelerating its digital presence and automation processes, 3D printing and cleantech. It trades at 15x earnings - half the value of its peers and it is presently trading below book value. It pays a solid dividend, backed by a payout ratio under 75% of cash flow. We would buy this with a stop loss at $18.50, looking to achieve $30 -- upside potential over 42%. Yield 4.85% (Analysts’ price target is $53.50)
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This is a Panic-proof Portfolio opinion which is available only for Premium members

Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

PAST TOP PICK
(A Top Pick Oct 13/21, Down 9.3%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with XRX has triggered its stop at $18.50. We recommend covering the position at this time. Combined with our previous buy recommendation, this will result in a net investment loss of 17%. We will look for better opportunties.
DON'T BUY
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

XRX has really struggled, with the stock down 43% this year. It is very cheap at 6X earnings, but is likely a value trap. Debt is very high, at about 6X cash flow. Sales are in decline, and are about half the level they were a decade ago. It is still profitable, however. EPS is half the level of 2016. The dividend payout ratio is only about 30%. The dividend was cut in 2017. Its small size and debt adds a lot of risk here. Market cap is only $1.3B, down from near $20B decades ago. It is expected to grow in the 2% to 3% range over the next couple of years. We would not consider the dividend to be safe, though with rates decline its debt burden becomes a bit less onerous. Still, not our type of stock and we would not suggest it. 
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