Financial Analysis: Qualstar (OTCMKTS:QBAKD) and Xerox (NASDAQ:XRX)

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

Volatility and Risk

Xerox has a beta of 2.4, suggesting that its share price is 140% more volatile than the S&P 500. Comparatively, Qualstar has a beta of 0.18, suggesting that its share price is 82% less volatile than the S&P 500.

Earnings & Valuation

This table compares Xerox and Qualstar”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Xerox	$7.76 billion	0.05	-$1.03 billion	($7.38)	-0.42
Qualstar	$6.59 million	0.77	$70,000.00	N/A	N/A

Qualstar has lower revenue, but higher earnings than Xerox.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Xerox and Qualstar, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Xerox	1	2	0	0	1.67
Qualstar	0	0	0	0	0.00

Xerox currently has a consensus target price of $3.45, suggesting a potential upside of 11.29%. Given Xerox’s stronger consensus rating and higher probable upside, research analysts clearly believe Xerox is more favorable than Qualstar.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Xerox	-11.93%	17.61%	0.65%
Qualstar	1.06%	N/A	N/A

Insider and Institutional Ownership

85.4% of Xerox shares are owned by institutional investors. 1.5% of Xerox shares are owned by insiders. Comparatively, 37.5% of Qualstar 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.

Summary

Xerox beats Qualstar on 7 of the 12 factors compared between the two stocks.

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.

About Qualstar

Qualstar Corporation engages in power solutions and data storage systems businesses worldwide. The company operates through two segments, Power Solutions and Data Storage Systems. It provides data storage systems under the Qualstar brand and power solutions under the N2Power brand. The company designs, manufactures, and sells switching power supplies that are used to convert AC line voltage to DC voltages; or DC voltages to other DC voltages for use in various electronic equipment, such as telecommunications equipment, machine tools, routers, switches, wireless systems, and gaming devices. It also supports and sells data storage devices used to store, retrieve, and manage electronic data primarily in network computing environments. The company serves original equipment manufacturers, information technology departments, and lower and middle market companies through distributor and reseller network, distributors, and independent outside sales representatives. Qualstar Corporation was founded in 1984 and is based in Camarillo, California.