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DXC Technology (DXC)
NYSE:DXC
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DXC Technology
(NYSE:DXC)47Neutral
Positive Factors
Financial performance
Margin outperformance in the quarter is largely attributed to disciplined cost management, uplifted by a one-time +50bp benefit from equity compensation savings.
Growth potential
Insurance Services and Software remains a bright spot, delivering +5.6% y/y organic growth.
Negative Factors
Growth concerns
Tepid bookings in the first half of FY25 underpins growth deceleration in F4Q and likely into early FY26.
DXC Technology (DXC) vs. S&P 500 (SPY)
Market Cap
$3.26B
Dividend YieldN/A
Average Volume (3M)1.15M
Price to Earnings (P/E)268.0
Beta (1Y)1.46
Revenue Growth-5.65%
EPS Growth78.20%
CountryUS
Employees130,000
SectorTechnology
Sector Strength48
IndustrySoftware
Share Statistics
EPS (TTM)-0.42
Shares Outstanding181,048,550
10 Day Avg. Volume1,137,327
30 Day Avg. Volume1,151,577
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.25
Price to Cash Flow (P/CF)1.30
P/FCF Ratio1.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$24.40Price Target Upside33.92% Upside
Rating ConsensusHold
Number of Analyst Covering5
DXC Technology Business Overview & Revenue Model
Company DescriptionDXC Technology Co. provides technology consulting, outsourcing and support services. It operates through the following segments: Global Business Services (GBS) and Global Infrastructure Services (GIS). The GBS segment provides technology solutions that help clients address challenges and accelerates the digital transformations that is tailored to each client's specific objectives. The GIS segment offers to deliver predictable outcomes and measurable results, while reducing business risk and operational costs for clients. The USPS segment delivers IT services and business solutions to all levels of government in the United States. The company was founded on 19th May, 2016 and is headquartered in Tysons, VA.
How the Company Makes MoneyDXC Technology makes money primarily through its comprehensive portfolio of IT services and solutions. The company's revenue streams include IT outsourcing, where it manages clients' IT infrastructure and operations, and consulting services, which provide strategic guidance and implementation support for digital transformation. Additionally, DXC generates income from its cloud and platform services, offering clients cloud migration, management, and optimization solutions. The company also earns revenue from application services, which involve application development, modernization, and maintenance. Significant partnerships with technology providers and industry alliances enhance DXC's offerings and contribute to its earnings by expanding its reach and capabilities in delivering advanced solutions to its clients.
DXC Technology Financial Statement Overview
Summary
DXC Technology struggles with profitability and revenue growth. The income statement indicates negative revenue trends and net profit margin challenges. The balance sheet shows moderate debt levels but weak return on equity. Cash flow is mixed, with positive operating cash flow but inconsistent free cash flow growth.Income Statement
DXC Technology exhibits declining revenue trends, with a negative net profit margin for the TTM, indicating challenges in profitability. The gross profit margin is negative, suggesting cost control issues. Positive EBITDA margin indicates some operational efficiency.40
Negative
Balance Sheet
The company has a moderate debt-to-equity ratio, which could indicate manageable leverage but poses potential risk if profitability issues persist. Return on equity is weak, reflecting poor net income performance. However, the equity ratio is reasonable, indicating a stable proportion of equity financing.50
Neutral
Cash Flow
DXC shows a positive operating cash flow, which is a good sign of core business strength. However, free cash flow growth has been inconsistent, and the operating cash flow to net income ratio indicates discrepancies between cash generation and accounting profitability.55
Neutral
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 13.09B | 13.67B | 14.43B | 16.27B | 17.73B | 19.58B | Gross Profit |
| 2.46B | 1.69B | 3.18B | 3.58B | 3.64B | 4.68B | EBIT |
| 622.00M | 466.00M | -659.00M | 1.60B | -397.00M | 1.57B | EBITDA |
| 1.61B | 1.81B | 942.00M | 3.17B | 3.07B | -2.81B | Net Income Common Stockholders |
| -75.00M | 91.00M | -566.00M | 718.00M | -146.00M | -5.36B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.72B | 1.22B | 1.86B | 2.67B | 2.97B | 3.68B | Total Assets |
| 13.03B | 13.87B | 15.85B | 20.14B | 22.04B | 26.01B | Total Debt |
| 864.00M | 4.87B | 5.37B | 6.17B | 6.97B | 11.49B | Net Debt |
| -859.00M | 3.64B | 3.51B | 3.50B | 4.00B | 7.81B | Total Liabilities |
| 9.78B | 10.80B | 12.03B | 14.76B | 16.73B | 20.88B | Stockholders Equity |
| 2.99B | 2.81B | 3.82B | 5.38B | 5.31B | 5.13B |
| Cash Flow | Free Cash Flow | ||||
| 463.00M | 756.00M | 960.00M | 952.00M | -391.00M | 1.76B | Operating Cash Flow |
| 1.36B | 1.36B | 1.42B | 1.50B | 124.00M | 2.35B | Investing Cash Flow |
| -467.00M | -491.00M | -635.00M | -60.00M | 4.67B | -2.14B | Financing Cash Flow |
| -867.00M | -1.49B | -1.51B | -1.82B | -5.48B | 657.00M |
DXC Technology Technical Analysis
Negative
18.22
Price Trends
20.34
Negative
20.80
Negative
19.96
Negative
Market Momentum
-0.77
Positive
33.49
Neutral
9.76
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DXC, the sentiment is Negative. The current price of 18.22 is below the 20-day moving average (MA) of 19.77, below the 50-day MA of 20.34, and below the 200-day MA of 19.96, indicating a bearish trend. The MACD of -0.77 indicates Positive momentum. The RSI at 33.49 is Neutral, neither overbought nor oversold. The STOCH value of 9.76 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DXC.
DXC Technology Risk Analysis
DXC Technology disclosed 40 risk factors in its most recent earnings report. DXC Technology reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
DXC Technology Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $41.42B | 18.58 | 15.55% | 1.44% | 1.98% | 7.16% | |
76 Outperform | $216.28B | 28.99 | 27.10% | 1.60% | 2.75% | 10.53% | |
75 Outperform | $80.41B | 24.69 | 29.99% | 2.10% | 3.08% | 11.92% | |
68 Neutral | $33.55B | 30.07 | 14.73% | 1.91% | -3.41% | 67.87% | |
67 Neutral | $234.79B | 39.40 | 24.14% | 2.64% | 1.45% | -20.56% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% | |
47 Neutral | $3.26B | 267.98 | -2.51% | ― | -5.65% | 78.20% |
* Technology Sector Average
Performance Comparison
DXC
DXC Technology
18.22
-2.16
-10.60%
ACN
Accenture
348.26
-26.32
-7.03%
CTSH
Cognizant
84.28
8.78
11.63%
INFY
Infosys
20.06
1.26
6.70%
IBM
International Business Machines
251.35
61.57
32.44%
WIT
Wipro
3.32
0.32
10.67%
DXC Technology Earnings Call Summary
Earnings Call Date: Feb 4, 2025 | % Change Since: -19.42% | Next Earnings Date: May 15, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong cash flow, margin expansion, and improved bookings, contrasted by revenue declines and challenges in specific segments. The strategic initiatives and leadership changes indicate a focus on long-term growth.Highlights
Strong Free Cash Flow
DXC Technology generated free cash flow of $483 million for the third quarter, with a year-to-date total of $576 million, exceeding full-year fiscal 2025 guidance.
Impressive Book-to-Bill Ratio
DXC achieved a book-to-bill ratio of 1.33x, the highest in eight quarters, indicating strong bookings growth across offerings.
Adjusted EBIT Margin Expansion
The adjusted EBIT margin expanded 140 basis points year-over-year to 8.9%, ahead of expectations.
Growth in Insurance and BPS
Insurance and horizontal BPS organic revenue grew 5.6% year-over-year, driven by expanding software license revenue.
Leadership Expansion
The addition of Brad Novak as CIO and other new leaders is expected to drive increased AI usage and data strategy improvements.
Lowlights
Revenue Decline
Total revenue declined 4.2% year-over-year on an organic basis, with GIS segment revenue down 7.8% year-over-year.
Fourth Quarter Revenue Guidance
DXC expects total organic revenue to decline 5.5% to 4.5% in the fourth quarter, reflecting the impact of low bookings in the first half of the year.
Challenges in Modern Workplace Segment
Modern Workplace segment experienced an 11.3% year-over-year decline, with a significant 30% drop in resale revenue.
Incremental FX Headwinds
Incremental foreign exchange headwinds impacted financial performance, although specifics were not detailed.
Company Guidance
During the third quarter of fiscal year 2025, DXC Technology reported performance exceeding its guidance, with revenue declining 4.2% year-over-year on an organic basis. The company achieved an adjusted EBIT margin of 8.9%, reflecting a 140 basis point expansion from the previous year, and a non-GAAP diluted EPS of $0.92, marking a 7% increase year-over-year. Free cash flow was robust at $483 million, bringing the year-to-date total to $576 million, surpassing the full-year guidance. Bookings surged with a book-to-bill ratio of 1.3x, the highest in eight quarters, indicating strong market traction. The company remains focused on disciplined execution, client-centric strategies, and leveraging a revamped go-to-market approach to drive future growth across its IT services portfolio.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.