Xerox Holdings (XRX) is back in focus after lifting its full year 2026 revenue and earnings guidance and posting second quarter results that showed a return to profitability compared with last year.

The corporate guidance upgrade and second quarter earnings on 30 July 2026 came alongside a sharp shift in sentiment. Xerox Holdings posted a 1-day share price return of 32.2% and a year to date share price return of 41.9%. However, the 1 year total shareholder return is still down 7.3% and the 5 year total shareholder return has fallen 80.1%, which points to momentum rebuilding from a weak long term base.

If Xerox's rebound has you rethinking where growth could come from next, this can be a prompt to look at other technology focused opportunities through the 56 AI infrastructure stocks

The question now is whether this sharp move in Xerox Holdings mainly reflects healthier earnings and firmer guidance, or whether sentiment has simply snapped back after years of weak returns as the valuation resets.

Preferred Price-to-Sales of 0.1x: Is it justified for Xerox Holdings?

Xerox Holdings is being valued at a very low revenue multiple, with the stock trading on a P/S ratio of 0.1x while still reporting annual revenue of $7.4b. Independent analysis also suggests this level is well below both peer and industry benchmarks, which is why the stock is being flagged as trading at good value.

The P/S ratio compares the value the market is placing on the company to the revenue it currently generates. For a business like Xerox Holdings, which is unprofitable and therefore lacks a meaningful P/E ratio, revenue-based measures can provide a clearer yardstick than earnings-based ones. A 0.1x multiple means investors are paying only a small fraction of one year of revenue for each share at the last close of $3.49.

Relative checks add more context. Xerox Holdings is assessed as good value based on its 0.1x P/S compared with an estimated fair P/S ratio of 1x. It is also described as good value relative to peers at 1.1x and the broader US Tech industry at 2.9x. That signals a sizeable gap between where the market is currently pricing Xerox Holdings and where a fair ratio based on comparables and regression analysis could sit over time.

Result: Price-to-Sales of 0.1x (UNDERVALUED)

However, Xerox Holdings still faces pressure from falling annual revenue of 1.5% and a net loss of US$1,058.0m, which could keep sentiment fragile.

Another View on Xerox Holdings Using the SWS DCF Model

The earlier focus was on Xerox Holdings trading on a low 0.1x P/S ratio and looking cheap relative to peers. Our DCF model points to a very different picture in dollar terms, with an estimated future cash flow value of $55.63 per share compared with the current price of $3.49. That is a very large gap. It raises the question of whether the model is too optimistic about future cash flows or whether the market is still heavily discounting Xerox's risks.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Xerox Holdings for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 56 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If the mix of renewed guidance and long term share price pressure around Xerox Holdings feels complex, now is the moment to review the data yourself and form a clear opinion. To help you balance the concerns against the potential upside, start with the 2 key rewards and 3 important warning signs.

Looking for more investment ideas beyond Xerox Holdings?

Before moving on from Xerox Holdings, consider giving yourself a wider set of options. Exploring fresh ideas can help you stress test your thinking and avoid relying on a single stock.

You can use the Simply Wall Street Screener to quickly find other stocks or investment ideas that might fit your style and goals.

• Target potential value opportunities by scanning companies that show strong fundamentals and appear mispriced through the 56 high quality undervalued stocks.
• Strengthen your focus on financial resilience by checking companies with robust balance sheets through the solid balance sheet and fundamentals stocks screener (46 results).
• Look for under-the-radar prospects that the market might be overlooking by reviewing the screener containing 20 high quality undiscovered gems.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.