Xerox Corp. (NYSE: XRX) is scheduled to report third quarter FY 2011 financial results before the market opens October 25, 2011. In the last four quarters, the company's reported EPS exceeded Wall Street's consensus estimates by margins in the range of 3.60 percent to 12.50 percent.
In fiscal 2011 Q1 and Q2 and fiscal 2010 Q4, the company's stock price lost in value on the day it reported quarterly results. However, in fiscal 2010 Q3 the stock price went up after the company reported its quarterly results.
During the third quarter, Xerox subsidiary ACS made three acquisitions. On July 20, 2011, ACS acquired Education Sales and Marketing LLC (ESM) in a move to expand its services in the higher-education market. This acquisition will allow ESM to take the next step in its growth by offering its unique capabilities to Xerox's client list. During September, ACS announced plans to acquire the Italian-based, multi-lingual customer care firm, XL World, further expanding its business process outsourcing capabilities across Europe. In October, ACS said that it is expanding its capabilities in the financial services industry with the acquisition of Symcor's U.S. operations. ACS benefits from the industry expertise of Symcor's leadership team and its 1,500 employees located at 15 service centers throughout the country.
Also, another subsidiary, Global Imaging Systems, acquired Xerographic Solutions Inc., a Rochester, N.Y.-based Xerox sales agent and dealer. Xerographic Solutions provides managed print and network services. The acquisition furthers Global Imaging's strategy of creating a nationwide network of locally-based providers focused on improving document management and office efficiency for small and mid-size businesses.
Recently, the company's board of directors declared a quarterly cash dividend of $0.0425 per share on Xerox common stock. The dividend is payable on January 31, 2012, to shareholders of record on December 30, 2011. The board also declared a quarterly cash dividend of $20 per share on Xerox series A convertible perpetual preferred stock. The dividend is payable on January 1, 2012, to shareholders of record on December 15, 2011.
For the third quarter, the Wall Street consensus is $0.25 per share, up 13 percent from a year ago when Xerox reported earnings of $0.22 per share. Over the past three months, the consensus estimate has been decreased from $0.26 per share. Analysts are projecting earnings of $1.09 per share for FY 2011. Revenue for the year is expected to grow 5.60 percent to $22.84 billion, from $21.63 billion a year ago.
Revenue has increased for four quarters in a row. Revenue rose 2 percent to $5.45 billion in the second quarter. Looking back further, revenue increased 16.6 percent year-over-year in the first quarter, 43.8 percent in the fourth quarter of the last fiscal year, and 50.6 percent in the third quarter of the last fiscal year.
In the business equipment industry, Xerox competes with Canon Inc. (NYSE: CAJ) and Hewlett-Packard Company (NYSE: HPQ). In the trailing 12-month period, Xerox reported net income of $997 million, or $0.70 per share, on revenue of $22.48 billion. Canon reported earnings of $3.01 billion, or $2.45 per share, on revenue of $47.60 billion; and Hewlett-Packard reported net income of $9.37 billion, or $4.26 per share, on revenue of $128.40 billion.
A majority of analysts give a Buy rating on the stock with a price target of $11.44 a share. Based on the price target, the stock has a potential to increase in value by almost 50.3 percent.