Is Xerox Corporation (XRX) Soaring Insider Trading Sending a Signal?

The exact reason why investors have been taking down Xerox Corporation (NYSE:XRX) stock at a frenetic pace might seem like a bit of a head-scratcher at the moment, but that’s only if you are buying the stock for the wrong reasons. On 06 December, the shares dropped -0.06 points or -0.22 percent at $26.64 with a heavy trade volume of 3.877 million shares. After opening the session at $26.25, the shares went as high as $26.645 and as low as $25.875, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $6.34 billion and now has 237.93 million shares outstanding. Xerox Corporation (XRX) stock has lost -6.92 percent of market value in 21 trading days.

XRX stock has a trailing 3-year beta of 1.11, offering the possibility of a higher rate of return, but also posing more risk. The portion of a company’s profit allocated to each outstanding share of common stock was $1.62 a share in the trailing twelve months. The stock’s value has fallen -8.61 percent year to date (YTD) against a decline of -9.51 percent in 12 month’s time. The company’s shares still trade -28.81 percent away from its 1-year high of $37.42 and 13.27 percent up from 52-week low of $23.52. The average consensus rating on the company is 2.4, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

Xerox Corporation (XRX) will probably climb 30.14 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $37-month high price target. This represents a whopping 38.89 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $33.5, which represents a return potential of 25.75 percent when compared to the closing price of the stock of $26.64 on Thursday, December 06. The lowest price target for the stock is $27.5 — slightly more than 3.23 percent from XRX’s current share price.

History has shown that shares in Xerox Corporation have gone down on 19 different earnings reaction days and are predicted to add 0.04 percent when the company reports upcoming earnings. Investors will get their next glimpse of XRX’s Q4 earnings on January 25. Analysts are forecasting revenue to suffer decline of -6.7 percent to $2.56B in the fiscal fourth quarter, while earnings are seen soaring by nearly 0 percent to $1.04 per share. It earned $0.85 per share, better than the $0.78, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $2.35B, worse than the $2.42B analysts expected. Earnings are estimated to increase by -4.5 percent this year, 5.6 percent next year and continue to increase by 2 percent annually for the next 5 years.

Let’s take a look at some insider activity at Xerox Corporation (NYSE:XRX) and see the pattern. The earliest insider trade took place on 11/06/2018. Feldman Michael David parted with a total of 3.73 thousand shares of company at average share price of $29. The total for the sales was set at $108.14 thousand. After this transaction, the Executive Vice President account balance stood at 2.87 thousand shares. The stock lost -8.14 percent since that insider sale. On 08/03/2018, Tessler Herve, Executive Vice President, sold 16.57 thousand shares at a price per share of $26.03. This removed 431.24 thousand shares from the insider’s fortune and the stock saw a 2.34 percent rally in value since the news became public. This transaction left 34.65 thousand shares in the Executive Vice President account.

On 07/27/2018, Chairman Cozza Keith performed a purchase transaction worth $1.27 million. This purchase at $25.42 each has added 50 thousand shares into the insider’s portfolio position. Meanwhile, shares have recorded 4.8 percent increase since the transaction was reported. The insider now is left with 50 thousand shares remaining in the account. Icahn Carl C, who performs the job, sold 140.01 thousand shares for $4.55 million. The disposal occurred on 02/05/2018 was priced at $32.5 per share. The share price plunged -18.03 percent since the reporting date. Icahn Carl C now left with a stake of 23.46 million XRX stock worth $624.87 million after the insider selling.

The stock is currently hovering around the first support level of $26.13. Below this, the next support is placed in the zone of $25.62. Till the time, the XRX stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 47.71 on daily chart, which may remain a cause for concern. If the price breaks below $25.62 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $26.9 mark may result into a pull-back move towards $27.16 level.

Shares of Xerox Corporation (XRX) are trading at a P/E ratio of 16.12 times earnings reported for the past 12 months. The industry XRX operates in has an average P/E of 12.67. Its P/E ratio went as low as 8.95X and as high as 12.94 over the 5-year span.Further, it is sporting a 0.63 on the Price-to-Sales ratio. Compare this with the industry average P/S of 0.88. 39.8 percent is the gross profit margin for Xerox Corporation and operating margin sits at 8.4 percent. Along with this, the net profit margin is 0.2 percent.