Xerox Fourth Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Xerox (NYSE:XRX) will unveil its latest earnings tomorrow, Thursday, January 24, 2013. Xerox engages in the development, manufacturing, marketing, services and finance of document equipment, software, solutions and services worldwide.

Xerox Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for profit of 28 cents per share, a decline of 15.2% from the company’s actual earnings in the year-ago quarter. During the past three months, the average estimate has moved down from 34 cents. Between one and three months ago, the average estimate moved down. It has been unchanged at 28 cents during the last month. Analysts are projecting profit to rise by 4.6% compared to last year’s $1.03.

Past Earnings Performance: Last quarter, the company saw net income of 25 cents per share versus a mean estimate of profit of 25 cents per share. This comes after two consecutive quarters of exceeding expectations.

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Stock Price Performance: Between November 19, 2012 and January 17, 2013, the stock price had risen $1.16 (18.1%), from $6.42 to $7.58. The stock price saw one of its best stretches over the last year between August 2, 2012 and August 13, 2012, when shares rose for eight straight days, increasing 8.1% (+54 cents) over that span. It saw one of its worst periods between December 20, 2012 and December 28, 2012 when shares fell for six straight days, dropping 6.2% (-44 cents) over that span.

A Look Back: In the third quarter, profit fell 11.9% to $282 million (21 cents a share) from $320 million (22 cents a share) the year earlier, meeting analyst expectations. Revenue remained stable at $5.42 billion.

Here’s how Xerox traded following its last earnings report 3 months ago and leading up to its upcoming earnings report this week:

XRX

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 1.35 last quarter. The current ratio is an indication of a firm’s liquidity and ability to meet creditor demands and generally, for every dollar the company owes in the short term, it has that figure available in assets that can be converted to cash in the short term. The company regressed in this liquidity measure from 1.49 in the second quarter to the last quarter driven in part by an increase in liabilities. Current liabilities increased 15.4% to $6.21 billion while assets rose 4.7% to $8.39 billion.

Key Stats:

The company is trying to use this earnings announcement to rebound from profit declines in the last three quarters. Net income fell 4.3% in the first quarter, by 3.1% in the second quarter and again in the third quarter.

On the top line, the company is looking to get back on the right track after last quarter’s drop snapped a string of revenue increases. Revenue rose 1.7% in the second quarter and 3.8% in the first quarter before falling in the third quarter.

Analyst Ratings: With three analysts rating the stock as a buy, one rating it as a sell and three rating it as a hold, there are indications of a bullish outlook.

Wall St. Revenue Expectations: Analysts are projecting a decline of 1.3% in revenue from the year-earlier quarter to $5.88 billion.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)