Xerox Holdings Corp (XRX, Financial), a prominent player in the software industry, has seen a significant surge in its stock price over the past three months. The company's stock price has risen by 22.55%, from its previous price, marking a notable gain. As of September 5, 2023, the stock is trading at $17.04, with a market cap of $2.68 billion. Over the past week, the stock has seen a 7.16% gain, further solidifying its upward trajectory. However, despite the recent gains, the stock's GF Value of $23.24 suggests that it is still modestly undervalued. This is a slight improvement from three months ago when the GF Value was $23.33, indicating a possible value trap.
Unpacking Xerox Holdings Corp
Xerox Holdings Corp operates in the software industry, focusing on the design, development, and sale of printing technology and related solutions. The company is an original equipment manufacturer (OEM) of multifunction printers, targeting large enterprise markets. Besides equipment, Xerox offers post-sales services like managed print services, which bring smart servicing and efficiencies to how employers use their print/copy equipment. The company is also venturing into new markets like digital print packaging solutions and printed electronics. Xerox derives 60% of its revenue from the U.S. and 40% from international markets. 
Profitability Analysis
Xerox's Profitability Rank stands at 6/10, indicating a relatively high level of profitability. The company's Operating Margin of 5.95% is better than 59.05% of companies in the industry. However, the company's ROE, ROA, and ROIC, which are -7.28%, -2.22%, and 5.09% respectively, are lower than the industry average. Despite this, Xerox has managed to maintain profitability for 7 out of the past 10 years, which is better than 60.28% of companies in the industry. 
Growth Prospects
Despite its profitability, Xerox's Growth Rank is relatively low at 2/10. The company's 3-year and 5-year revenue growth rates per share are 3.70% and 1.70% respectively. However, the company's future 3-year to 5-year total revenue growth rate estimate is -1.84%, indicating a potential slowdown in growth. On the other hand, the company's EPS without NRI growth rate for the same period is estimated at 22.84%, suggesting a potential increase in profitability. 
Major Stockholders
Carl Icahn (Trades, Portfolio) is the largest holder of Xerox stock, owning 21.8% of the shares. Jim Simons (Trades, Portfolio) and Chuck Royce (Trades, Portfolio) are the other major holders, owning 0.33% and 0.27% of the shares respectively.
Competitive Landscape
Xerox faces stiff competition from other companies in the software industry. N-able Inc (NABL, Financial) with a market cap of $2.45 billion, Perficient Inc (PRFT, Financial) with a market cap of $2.15 billion, and GDS Holdings Ltd (GDS, Financial) with a market cap of $2.25 billion are some of the company's main competitors.
Conclusion
In conclusion, Xerox Holdings Corp has shown a promising performance in the stock market over the past three months. Despite being modestly undervalued according to its GF Value, the company's profitability and growth prospects make it a potential investment opportunity. However, investors should also consider the company's competitive landscape and future growth estimates before making an investment decision.
