Reviewing Xerox (NASDAQ:XRX) & Canon (OTCMKTS:CAJPY)

Canon (OTCMKTS:CAJPY) and Xerox (NASDAQ:XRX) are both technology companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, institutional ownership, valuation, dividends and profitability.

Volatility and Risk

Canon has a beta of 0.52, meaning that its share price is 48% less volatile than the S&P 500. Comparatively, Xerox has a beta of 2.42, meaning that its share price is 142% more volatile than the S&P 500.

Institutional and Insider Ownership

85.4% of Xerox shares are held by institutional investors. 0.0% of Canon shares are held by insiders. Comparatively, 1.5% of Xerox shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Canon	7.36%	9.41%	5.53%
Xerox	-11.93%	17.61%	0.65%

Dividends

Canon pays an annual dividend of $0.80 per share and has a dividend yield of 2.7%. Xerox pays an annual dividend of $0.10 per share and has a dividend yield of 3.0%. Canon pays out 31.5% of its earnings in the form of a dividend. Xerox pays out -1.4% 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 is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares Canon and Xerox”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Canon	$29.46 billion	0.88	$2.22 billion	$2.54	11.66
Xerox	$7.02 billion	0.06	-$1.03 billion	($7.38)	-0.45

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

Analyst Ratings

This is a summary of current ratings for Canon and Xerox, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Canon	0	1	0	0	2.00
Xerox	1	2	1	0	2.00

Xerox has a consensus price target of $4.48, indicating a potential upside of 35.04%. Given Xerox’s higher probable upside, analysts clearly believe Xerox is more favorable than Canon.

Summary

Xerox beats Canon on 8 of the 15 factors compared between the two stocks.

About Canon

Canon Inc., together with its subsidiaries, manufactures and sells office multifunction devices (MFDs), plain paper copying machines, laser and inkjet printers, cameras, diagnostic equipment, and lithography equipment. The company operates through four segments: Printing Business Unit, Imaging Business Unit, Medical Business Unit, and Industrial and Others Business Unit. The Printing Business Unit segment offers office MFDs, document solutions, laser multifunction printers, laser printers, inkjet printers, image scanners, calculators, digital continuous feed presses, digital sheet-fed presses, and large format printers. The Imaging Business Unit segment provides interchangeable-lens digital cameras, digital compact cameras, interchangeable lenses, compact photo printers, network cameras, video management and video content analytics software, digital camcorders, digital cinema cameras, broadcast equipment, and multimedia projectors. The Medical System Business Unit segment offers computed tomography systems, diagnostic ultrasound systems, diagnostic X-ray systems, magnetic resonance imaging systems, clinical chemistry analyzers, digital radiography systems, and ophthalmic equipment. The Industry and Others Business Unit segment provides semiconductor lithography equipment, flat panel display lithography equipment, vacuum thin-film deposition equipment, organic light-emitting diode display manufacturing equipment, die bonders, handy terminals, and document scanners. The company also provides maintenance services; and supplies replacement drums, parts, toners, and papers. It sells its products under the Canon brand through subsidiaries or independent distributors to dealers and retail outlets, as well as directly to end-users globally. Canon Inc. was founded in 1933 and is headquartered in Tokyo, Japan.

About Xerox

Xerox Holdings Corporation, together with its subsidiaries, operates as a workplace technology company that integrates hardware, services, and software for enterprises in the Americas, Europe, the Middle East, Africa, India, and internationally. The company operates through two segments, Print and Other; and FITTLE. The Print and Other segment designs, develops, and sells document systems, solutions, and services; and IT and software products and services. The FITTLE segment offers financing solutions for direct channel customer purchases; and lease financing to end-users. It also offers workplace solutions comprising desktop monochrome, color, and multifunction printers, and ConnectKey software; digital printing presses and light production devices; and digital services that support workflow automation, personalization and communication software, content management solutions, and digitization services. In addition, the company provides graphic communications, in-plant, and production solutions; FreeFlow, a software solutions for the automation and integration of processing of print job comprising file preparation, final production, and electronic publishing; and IT services, end user computing devices, network infrastructure, and communications technology, as well as technology product support, professional engineering, and commercial robotic process automation. Further, it sells paper products and standalone software, such as CareAR, DocuShare, and XMPie; and invests in startups. The company sells its products through its direct sales force, distributors, independent agents, dealers, value-added resellers, systems integrators, and e-commerce marketplaces. The company was formerly known as Xerox Corporation and changed its name to Xerox Holdings Corporation in August 2019. Xerox Holdings Corporation was founded in 1903 and is headquartered in Norwalk, Connecticut.