Latest news with #ComputerSciencesCorporation
Yahoo
14-05-2025
- Business
- Yahoo
DXC's (NYSE:DXC) Q1 Sales Top Estimates But Stock Drops 12.7%
IT services provider DXC Technology (NYSE:DXC) beat Wall Street's revenue expectations in Q1 CY2025, but sales fell by 6.4% year on year to $3.17 billion. On the other hand, next quarter's revenue guidance of $3.07 billion was less impressive, coming in 1.4% below analysts' estimates. Its non-GAAP profit of $0.84 per share was 8.6% above analysts' consensus estimates. Is now the time to buy DXC? Find out in our full research report. Revenue: $3.17 billion vs analyst estimates of $3.14 billion (6.4% year-on-year decline, 0.9% beat) Adjusted EPS: $0.84 vs analyst estimates of $0.77 (8.6% beat) Adjusted EBITDA: $741 million vs analyst estimates of $458.1 million (23.4% margin, 61.7% beat) Management's revenue guidance for the upcoming financial year 2026 is $12.31 billion at the midpoint, missing analyst estimates by 0.8% and implying -4.4% growth (vs -5.8% in FY2025) Adjusted EPS guidance for the upcoming financial year 2026 is $3 at the midpoint, missing analyst estimates by 12% Operating Margin: 11%, up from -7% in the same quarter last year Free Cash Flow Margin: 3.5%, down from 4.6% in the same quarter last year Organic Revenue fell 4.2% year on year, in line with the same quarter last year Market Capitalization: $3.07 billion Born from the 2017 merger of Computer Sciences Corporation and HP Enterprise's services business, DXC Technology (NYSE:DXC) is a global IT services company that helps businesses transform their technology infrastructure, applications, and operations. Reviewing a company's long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. With $12.87 billion in revenue over the past 12 months, DXC is larger than most business services companies and benefits from economies of scale, enabling it to gain more leverage on its fixed costs than smaller competitors. This also gives it the flexibility to offer lower prices. However, its scale is a double-edged sword because it's challenging to maintain high growth rates when you've already captured a large portion of the addressable market. For DXC to boost its sales, it likely needs to adjust its prices, launch new offerings, or lean into foreign markets. As you can see below, DXC's demand was weak over the last five years. Its sales fell by 8% annually, a tough starting point for our analysis. Long-term growth is the most important, but within business services, a half-decade historical view may miss new innovations or demand cycles. DXC's annualized revenue declines of 5.6% over the last two years suggest its demand continued shrinking. DXC also reports organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don't accurately reflect its fundamentals. Over the last two years, DXC's organic revenue averaged 4.4% year-on-year declines. Because this number aligns with its normal revenue growth, we can see the company's core operations (not acquisitions and divestitures) drove most of its results. This quarter, DXC's revenue fell by 6.4% year on year to $3.17 billion but beat Wall Street's estimates by 0.9%. Company management is currently guiding for a 5.3% year-on-year decline in sales next quarter. Looking further ahead, sell-side analysts expect revenue to decline by 3.4% over the next 12 months. While this projection is better than its two-year trend, it's hard to get excited about a company that is struggling with demand. Software is eating the world and there is virtually no industry left that has been untouched by it. That drives increasing demand for tools helping software developers do their jobs, whether it be monitoring critical cloud infrastructure, integrating audio and video functionality, or ensuring smooth content streaming. Click here to access a free report on our 3 favorite stocks to play this generational megatrend. Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It's also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes. DXC was profitable over the last five years but held back by its large cost base. Its average operating margin of 2.4% was weak for a business services business. On the plus side, DXC's operating margin rose by 6.6 percentage points over the last five years. In Q1, DXC generated an operating profit margin of 11%, up 18 percentage points year on year. This increase was a welcome development, especially since its revenue fell, showing it was more efficient because it scaled down its expenses. Revenue trends explain a company's historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions. Sadly for DXC, its EPS declined by 9.3% annually over the last five years, more than its revenue. We can see the difference stemmed from higher interest expenses or taxes as the company actually grew its operating margin and repurchased its shares during this time. In Q1, DXC reported EPS at $0.84, down from $0.97 in the same quarter last year. Despite falling year on year, this print beat analysts' estimates by 8.6%. Over the next 12 months, Wall Street expects DXC's full-year EPS of $3.43 to stay about the same. We enjoyed seeing DXC beat analysts' revenue, EPS, and EBITDA expectations this quarter. On the other hand, its full-year revenue and EPS guidance fell short of Wall Street's estimates. Overall, this quarter could have been better. The stock traded down 12.5% to $14.50 immediately following the results. DXC didn't show it's best hand this quarter, but does that create an opportunity to buy the stock right now? If you're making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it's free. Sign in to access your portfolio
Yahoo
08-04-2025
- Business
- Yahoo
Q4 Rundown: DXC (NYSE:DXC) Vs Other IT Services & Consulting Stocks
The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let's take a look at how DXC (NYSE:DXC) and the rest of the it services & consulting stocks fared in Q4. IT Services & Consulting companies stand to benefit from increasing enterprise demand for digital transformation, AI-driven automation, and cybersecurity resilience. Many enterprises can't attack these topics alone and need IT services and consulting on everything from technical advice to implementation. Challenges in meeting these needs will include finding talent in specialized and evolving IT fields. While AI and automation can enhance productivity, they also threaten to commoditize certain consulting functions. Another ongoing challenge will be pricing pressures from offshore IT service providers, which have lower labor costs and increasingly equal access to advanced technology like AI. The 8 it services & consulting stocks we track reported a strong Q4. As a group, revenues beat analysts' consensus estimates by 1% while next quarter's revenue guidance was 0.8% above. Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 25.7% since the latest earnings results. Born from the 2017 merger of Computer Sciences Corporation and HP Enterprise's services business, DXC Technology (NYSE:DXC) is a global IT services company that helps businesses transform their technology infrastructure, applications, and operations. DXC reported revenues of $3.23 billion, down 5.1% year on year. This print fell short of analysts' expectations by 0.9%, but it was still a strong quarter for the company with a solid beat of analysts' EPS estimates and an impressive beat of analysts' full-year EPS guidance estimates. DXC delivered the weakest full-year guidance update of the whole group. The stock is down 33.4% since reporting and currently trades at $15.05. Is now the time to buy DXC? Access our full analysis of the earnings results here, it's free. With engineering centers across the Americas, Europe, and India serving Fortune 1000 companies, Grid Dynamics (NASDAQ:GDYN) provides technology consulting, engineering, and analytics services to help large enterprises modernize their technology systems and business processes. Grid Dynamics reported revenues of $100.3 million, up 28.5% year on year, outperforming analysts' expectations by 4.3%. The business had an exceptional quarter with a solid beat of analysts' EPS estimates and full-year revenue guidance exceeding analysts' expectations. Grid Dynamics delivered the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. The stock is down 28.3% since reporting. It currently trades at $14.69. Is now the time to buy Grid Dynamics? Access our full analysis of the earnings results here, it's free. Evolving from its roots in IT staffing to become a high-end technology consulting powerhouse, ASGN (NYSE:ASGN) provides specialized IT consulting services and staffing solutions to Fortune 1000 companies and U.S. federal government agencies. ASGN reported revenues of $985 million, down 8.3% year on year, falling short of analysts' expectations by 1.5%. It was a slower quarter with EPS guidance for next quarter missing analysts' estimates. ASGN delivered the slowest revenue growth in the group. As expected, the stock is down 30.7% since the results and currently trades at $60.86. Read our full analysis of ASGN's results here. Born from IBM's managed infrastructure services business in a 2021 spinoff, Kyndryl (NYSE:KD) is the world's largest IT infrastructure services provider that designs, builds, and manages technology environments for enterprise customers. Kyndryl reported revenues of $3.74 billion, down 4.9% year on year. This print came in 2% below analysts' expectations. In spite of that, it was a very strong quarter as it recorded an impressive beat of analysts' EPS estimates and revenue guidance for next quarter exceeding analysts' expectations. Kyndryl had the weakest performance against analyst estimates among its peers. The stock is down 24.9% since reporting and currently trades at $28.46. Read our full, actionable report on Kyndryl here, it's free. With over 2,500 research experts guiding organizations through complex technology landscapes, Gartner (NYSE:IT) provides research, advisory services, and conferences that help executives make better decisions about technology and other business priorities. Gartner reported revenues of $1.72 billion, up 8.1% year on year. This result beat analysts' expectations by 1.4%. It was an exceptional quarter as it also logged a solid beat of analysts' EPS estimates and a narrow beat of analysts' constant currency revenue estimates. The stock is down 28.5% since reporting and currently trades at $391.80. Read our full, actionable report on Gartner here, it's free. As a result of the Fed's rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed's 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump's victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025. Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate. Join Paid Stock Investor Research Help us make StockStory more helpful to investors like yourself. Join our paid user research session and receive a $50 Amazon gift card for your opinions. Sign up here. Sign in to access your portfolio
Yahoo
04-04-2025
- Business
- Yahoo
3 Reasons DXC is Risky and 1 Stock to Buy Instead
What a brutal six months it's been for DXC. The stock has dropped 21.4% and now trades at $16.38, rattling many shareholders. This might have investors contemplating their next move. Is now the time to buy DXC, or should you be careful about including it in your portfolio? Check out our in-depth research report to see what our analysts have to say, it's free. Even with the cheaper entry price, we're cautious about DXC. Here are three reasons why you should be careful with DXC and a stock we'd rather own. Born from the 2017 merger of Computer Sciences Corporation and HP Enterprise's services business, DXC Technology (NYSE:DXC) is a global IT services company that helps businesses transform their technology infrastructure, applications, and operations. We can better understand IT Services & Consulting companies by analyzing their organic revenue. This metric gives visibility into DXC's core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement. Over the last two years, DXC's organic revenue averaged 4.2% year-on-year declines. This performance was underwhelming and implies it may need to improve its products, pricing, or go-to-market strategy. It also suggests DXC might have to lean into acquisitions to grow, which isn't ideal because M&A can be expensive and risky (integrations often disrupt focus). We track the long-term change in earnings per share (EPS) because it highlights whether a company's growth is profitable. Sadly for DXC, its EPS declined by 11.5% annually over the last five years, more than its revenue. This tells us the company struggled because its fixed cost base made it difficult to adjust to shrinking demand. ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity). We like to invest in businesses with high returns, but the trend in a company's ROIC is what often surprises the market and moves the stock price. Unfortunately, DXC's ROIC has decreased significantly over the last few years. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between. We cheer for all companies serving everyday consumers, but in the case of DXC, we'll be cheering from the sidelines. After the recent drawdown, the stock trades at 5.1× forward price-to-earnings (or $16.38 per share). While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are better stocks to buy right now. Let us point you toward a top digital advertising platform riding the creator economy. Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years. Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.
