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What's in the Cards for Xerox (XRX) This Earnings Season?

Zacks Equity Research

Xerox Corporation’s XRX upcoming second-quarter 2019 results are likely to reflect year-over-year increase in earnings but decline in revenues.

Shares of the company have gained a massive 73.5% year to date, significantly outperforming the 45% rally of the industry it belongs to.

The Expectations in Detail

The Zacks Consensus Estimate for revenues in the to-be-reported quarter is pegged at $2.32 billion, indicating year-over-year decline of 7.5%. The expected decline is likely to be due to lower transactional revenues and decrease in activity in certain areas impacted by the company’s transformational actions. In the first quarter of 2019, revenues of $2.21 billion fell 9.4% on a year-over-year basis.

Xerox has a revenue improvement strategy in place that includes simplification of organizational structure, improving alignment of compensation and expansion of channel presence. Expected results are likely to take time.

The Zacks Consensus Estimate for earnings in the to-be-reported quarter is pegged at 93 cents, indicating year-over-year increase of 16.3%. The expected uptick is likely to be driven by "Project Own It," the company’s initiative aimed at increasing productivity and operational efficiency, reducing costs and realigning business to changing market conditions. In the first quarter of 2019, adjusted EPS of $91 increased 33.8%, year over year.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially if the companies are witnessing negative estimate revisions. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Xerox has an Earnings ESP of 0.00% and Zacks Rank #3, a combination that makes surprise prediction difficult.

Stocks to Consider

Here are a few stocks from the broader Zacks Business Services sector that investors may consider as our model shows that these have the right combination of elements to beat on second-quarter 2019 earnings:

S&P Global SPGI has an Earnings ESP of +0.94% and a Zacks Rank #2.  The company is slated to report results on Aug 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

IQVIA Holdings IQV has an Earnings ESP of +1.12% and a Zacks Rank #3. The company is slated to release results on Jul 24.

Fiserv FISV has an Earnings ESP of +0.79% and a Zacks Rank #3. The company is slated to report results on Jul 25.

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S&P Global Inc. (SPGI) : Free Stock Analysis Report
 
Xerox Corporation (XRX) : Free Stock Analysis Report
 
Fiserv, Inc. (FISV) : Free Stock Analysis Report
 
IQVIA Holdings Inc. (IQV) : Free Stock Analysis Report
 
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