Comparing Xerox (NASDAQ:XRX) and Canaan (NASDAQ:CAN)

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

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Canaan	$529.73 million	0.29	-$210.27 million	($0.44)	-0.49
Xerox	$7.02 billion	0.05	-$1.03 billion	($7.38)	-0.35

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Canaan	-67.78%	-77.73%	-51.51%
Xerox	-11.93%	17.61%	0.65%

Risk & Volatility

Canaan has a beta of 2.63, indicating that its share price is 163% more volatile than the S&P 500. Comparatively, Xerox has a beta of 2.45, indicating that its share price is 145% more volatile than the S&P 500.

Insider and Institutional Ownership

70.1% of Canaan shares are held by institutional investors. Comparatively, 85.4% of Xerox shares are held by institutional investors. 0.3% of Canaan shares are held by insiders. Comparatively, 1.5% of Xerox shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Canaan and Xerox, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Canaan	2	0	5	1	2.62
Xerox	2	1	1	0	1.75

Canaan presently has a consensus price target of $1.75, suggesting a potential upside of 706.45%. Xerox has a consensus price target of $4.17, suggesting a potential upside of 63.21%. Given Canaan’s stronger consensus rating and higher possible upside, research analysts clearly believe Canaan is more favorable than Xerox.

Summary

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

About Canaan

Canaan Inc. engages in the research, design, and sale of integrated circuit (IC) final mining equipment products by integrating IC products for bitcoin mining and related components in the People's Republic of China. It is also involved in the assembly and distribution of mining equipment and spare parts. The company has operations in the United States, Australia, Kazakhstan, Hong Kong, Canada, Mainland China, Thailand, Sweden, and internationally. Canaan Inc. was founded in 2013 and is based in Singapore.

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.