Xerox (NYSE:XRX) is the leading supplier of printing equipment and supplies to large enterprises and small and midsize businesses. Shares of Xerox surged 42.7% in the month of January. Should investors consider buying today, or is the stock overheated in February?
Xerox stock received a huge bump after the company release its fourth-quarter and full-year results this week. On an adjusted basis, Xerox said that it expected profit between $3.70 and $3.80 for fiscal 2019, far exceeding analyst expectations. The company has experienced impressive success due to streamlining its business, which sparked an adjustment in its outlook.
On the other hand, Xerox revenues disappointed in the fourth quarter. Revenue came in at $2.53 billion compared to $2.56 billion projected.
The question going forward will be whether Xerox can mitigate revenue declines while continuing to cut costs. Net income in the fourth quarter reached $137 million or $0.56 per share compared to a loss of $190 million or $0.76 per share in Q4 2017.
Xerox is still trading well off its 52-week high of $34.33 which it posted in the spring of 2018. As of close on January 31, Xerox boasted an RSI of 81.
This puts the stock well into overbought territory as we open the month of February. Its 2019 outlook adjustment should please shareholders, but the stock is trading at a premium right now. Income investors may be attracted to its 3.5% yield, but even those chasing dividends should await a pullback.
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