Critical Comparison: Xerox (NASDAQ:XRX) and CPI Card Group (NASDAQ:PMTS)

CPI Card Group (NASDAQ:PMTS) and Xerox (NASDAQ:XRX) are both small-cap technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, earnings, valuation, risk, profitability, analyst recommendations and dividends.

Earnings & Valuation

This table compares CPI Card Group and Xerox”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CPI Card Group	$587.31 million	0.57	$14.95 million	$1.15	25.50
Xerox	$7.02 billion	0.06	-$1.03 billion	($7.38)	-0.44

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

Volatility & Risk

CPI Card Group has a beta of 1.05, indicating that its share price is 5% more volatile than the S&P 500. Comparatively, Xerox has a beta of 2.4, indicating that its share price is 140% more volatile than the S&P 500.

Institutional & Insider Ownership

22.1% of CPI Card Group shares are held by institutional investors. Comparatively, 85.4% of Xerox shares are held by institutional investors. 5.8% of CPI Card Group shares are held by insiders. Comparatively, 1.5% of Xerox shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares CPI Card Group and Xerox’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CPI Card Group	2.34%	-131.31%	6.25%
Xerox	-11.93%	17.61%	0.65%

Analyst Ratings

This is a summary of current recommendations and price targets for CPI Card Group and Xerox, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CPI Card Group	0	2	4	0	2.67
Xerox	1	2	0	0	1.67

CPI Card Group currently has a consensus target price of $27.50, suggesting a potential downside of 6.21%. Xerox has a consensus target price of $3.45, suggesting a potential upside of 6.98%. Given Xerox’s higher probable upside, analysts clearly believe Xerox is more favorable than CPI Card Group.

Dividends

CPI Card Group pays an annual dividend of $0.18 per share and has a dividend yield of 0.6%. Xerox pays an annual dividend of $0.10 per share and has a dividend yield of 3.1%. CPI Card Group pays out 15.7% 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.

Summary

CPI Card Group beats Xerox on 9 of the 16 factors compared between the two stocks.

About CPI Card Group

CPI Card Group Inc., together with its subsidiaries, engages in the design, production, data personalization, packaging, and fulfillment of financial payment cards. It operates through Debit and Credit, and Prepaid Debit segments. The Debit and Credit segment produces financial payment cards and provides integrated card services to card-issuing financial institutions. Its products include Europay, Mastercard, and Visa (EMV) and non-EMV financial payment cards, including contact and contactless cards, plastic and encased metal cards, and Second Wave payment cards, as well as private label credit cards. This segment also provides on-demand services and various integrated card services, including card personalization and fulfillment, as well as instant issuance services. The Prepaid Debit segment primarily offers integrated card services comprising tamper-evident security packaging services to prepaid debit card providers. It also produces financial payment cards issued on the networks of the payment card brands. It serves issuers of debit and credit cards, Prepaid Debit Card program managers, community banks, credit unions, and group service providers in the United States. The company was formerly known as CPI Holdings I, Inc. and changed its name to CPI Card Group Inc. in August 2015. CPI Card Group Inc. was incorporated in 2007 and is headquartered in Littleton, Colorado.

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.