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Xerox's (XRX) Earnings Beat Estimates in Q2, Decrease Y/Y

Zacks Equity Research

Xerox Holdings Corporation XRX reported mixed second-quarter 2020 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same.

Adjusted earnings per share of 15 cents beat the consensus mark by 25% and declined year over year. Total revenues of $1.47 billion missed the consensus mark by 5.1% but declined year over year. The coronavirus pandemic had a significant negative impact on the company’s quarterly results.

Revenues in Detail

Sales revenues totaled $460 million, down 42.5% year over year. Services, maintenance and rentals revenues totaled $949 million, down 32.3% year over year. Financing revenues of $56 million declined 8.2%.

Operating Performance

Adjusted operating profit of $62 million declined 77.9% year over year. Adjusted operating margin shrunk 820 basis points (bps) year over year to 4.2%.

Selling, administrative and general expenses, as a percentage of revenues, increased to 29.1% from the 22.8% reported in the year-ago quarter. Research, development and engineering expenses, as a percentage of revenues, came in at 5.2%, up from the year-ago quarter’s 3.9%.

Xerox Corporation Price, Consensus and EPS Surprise

Xerox Corporation Price, Consensus and EPS Surprise
Xerox Corporation Price, Consensus and EPS Surprise

Xerox Corporation price-consensus-eps-surprise-chart | Xerox Corporation Quote

Balance Sheet and Cash Flow

Xerox exited the second quarter with cash, cash equivalents and restricted cash balance of $2.3 billion. Long-term debt was $2.2 billion at the end of the quarter.

The company generated $34 million of cash from continuous operations and free cash flow was $15 million.

Xerox currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Services Companies

Equifax Inc. EFX reported second-quarter 2020 adjusted earnings of $1.60 per share that beat the Zacks Consensus Estimate by 22.1% and improved 14.3% on a year-over-year basis. Revenues of $982.8 million outpaced the consensus estimate by 6.4% and improved 12% year over year on a reported basis. The stock currently carries a Zacks Rank #3 (Hold).

ManpowerGroup Inc. MAN reported mixed second-quarter 2020 earnings of 18 cents per share, beating the consensus mark by 38.5% but declining more than 100% year over year. Revenues of $3.74 billion missed the consensus mark by 1.5% and declined 30.4% year over year. The stock currently carries a Zacks Rank #3.

 IHS Markit Ltd. INFO recorded second-quarter fiscal 2020 adjusted earnings per share of 69 cents that surpassed the consensus estimate by 6.2% but decreased 3% on a year-over-year basis. Total revenues came in at $1.03 billion, missing the consensus mark by 2.1% and declining 10%  from the year-ago quarter. The stock currently carries a Zacks Rank #3.

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