Is Xerox Holdings Corp. overvalued or undervalued?

As of 23 April 2024, the valuation grade for Xerox Holdings Corp. has moved from fair to risky, indicating a significant deterioration in its financial health. The company is currently considered overvalued. Key ratios highlight this concern: the Price to Book Value stands at 0.52, the EV to EBITDA is 8.35, and the Dividend Yield is notably high at 20.09%, which may not be sustainable given the company's financial struggles.
In comparison to peers, Xerox's performance is alarming; for instance, Extreme Networks, Inc. has a much higher EV to EBITDA of 87.24, reflecting a stark contrast in valuation metrics. Additionally, Xerox's ROE is at -19.55%, which underscores the challenges it faces in generating returns for shareholders. The company's stock has underperformed significantly against the S&P 500, with a year-to-date decline of 36.77% compared to the index's modest gain of 2.44%. This further reinforces the view that Xerox is currently overvalued in the market.