Critical Review: AstroNova (ALOT) & Xerox (XRX)

AstroNova (NASDAQ:ALOT) and Xerox (NYSE:XRX) are both business services companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, risk, dividends, institutional ownership, profitability, valuation and analyst recommendations.

Volatility and Risk

AstroNova has a beta of 0.02, meaning that its share price is 98% less volatile than the S&P 500. Comparatively, Xerox has a beta of 1.27, meaning that its share price is 27% more volatile than the S&P 500.

Dividends

AstroNova pays an annual dividend of $0.28 per share and has a dividend yield of 1.5%. Xerox pays an annual dividend of $1.00 per share and has a dividend yield of 3.5%. AstroNova pays out 44.4% of its earnings in the form of a dividend. Xerox pays out 28.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Xerox has increased its dividend for 5 consecutive years. Xerox is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

57.4% of AstroNova shares are owned by institutional investors. Comparatively, 83.2% of Xerox shares are owned by institutional investors. 10.4% of AstroNova shares are owned by insiders. Comparatively, 0.2% of Xerox shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and price targets for AstroNova and Xerox, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AstroNova 0 0 1 0 3.00
Xerox 0 2 4 0 2.67

Xerox has a consensus price target of $35.88, indicating a potential upside of 26.28%. Given Xerox’s higher probable upside, analysts plainly believe Xerox is more favorable than AstroNova.

Earnings and Valuation

This table compares AstroNova and Xerox’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AstroNova $113.40 million 1.18 $3.28 million $0.63 30.65
Xerox $10.27 billion 0.71 $195.00 million $3.48 8.16

Xerox has higher revenue and earnings than AstroNova. Xerox is trading at a lower price-to-earnings ratio than AstroNova, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares AstroNova and Xerox’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AstroNova 3.20% 8.08% 4.41%
Xerox 0.34% 16.50% 5.63%

Summary

Xerox beats AstroNova on 12 of the 17 factors compared between the two stocks.

About AstroNova

AstroNova, Inc. designs, develops, manufactures, and distributes specialty printers, and data acquisition and analysis systems in the United States, Canada, Asia, Europe, Central and South America, and internationally. The company operates through two segments, Product Identification and Test & Measurement (T&M). The Product Identification segment offers tabletop and work cell-ready digital color label printers; specialty OEM printing systems; and labels, tags, inks, toner, and thermal transfer ribbons under the QuickLabel brand. This segment also offers T2-C, an inkjet table top label press; T2, a parent of the T2-C; T4 for print, die cut, and lamination; and T3, a customizable label production and finishing press under the TrojanLabel brand. In addition, this segment sells various specialized software used to operate the printers and presses, design labels, and manage printing on an automated basis. It serves chemicals, cosmetics, food and beverage, medical products, pharmaceuticals, and other industries, as well as brand owners, label converters, commercial printers, and packaging manufacturers. The T&M segment offers visual data from local and networked data streams and sensors; a range of hardware and software products under the AstroNova T&M brand; Daxus portable data acquisition systems; TMX high-speed data acquisition systems; DDX100 SmartCorder portable data acquisition systems; EV-500, a digital strip chart recording system; PTA-45B cockpit printers; and ToughWriter, Miltope, and RITEC branded airborne printers. Its AstroNova airborne printers are used in flight decks, as well as military, commercial, and business aircraft cabins; and ToughSwitch Ethernet switches used in military aircraft and vehicles. The company was formerly known as Astro-Med, Inc. and changed its name to AstroNova, Inc. in May 2016. The company was founded in 1969 and is headquartered in West Warwick, Rhode Island.

About Xerox

Xerox Corporation designs, develops, and sells document management systems and solutions worldwide. It offers managed document services, including managed print services and multi-channel communication services, as well as a range of digital solutions, such as workflow automation services, content management, and digitization services. The company also provides desktop monochrome and color printers, and multifunction printers; copiers, digital printing presses and light production devices, and solutions; graphic communications and commercial printers; inkjet presses; and FreeFlow portfolio of software solutions for the automation and integration of print jobs processing. In addition, it sells paper products, wide-format systems, and global imaging systems network integration solutions. The company sells its products and services directly to its customers through sales force, as well as through independent agents, dealers, value-added resellers, systems integrators, and the Web. Xerox Corporation was founded in 1906 and is headquartered in Norwalk, Connecticut.

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