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DXC Technology (DXC)
NYSE:DXC
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DXC Technology
(NYSE:DXC)
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Rating:59Neutral
Price Target:
$13.00
▲(5.78% Upside)
Action:ReiteratedDate:01/30/26
The score is held back most by continued revenue contraction and leverage constraints despite improved profitability and solid free cash flow. Valuation is a notable positive (low P/E), while technical signals and earnings-call guidance point to a near-term wait-and-see setup with execution risk on the turnaround initiatives.
Positive Factors
Strong free cash flow and deleveraging
Consistent positive free cash flow and meaningful debt paydown improve financial flexibility over the medium term. Solid cash cushions operations, funds investments/productization, supports buybacks and scheduled bond retirements, and reduces refinancing risk if revenue remains pressured.
Improving bookings and pipeline momentum
Book-to-bill above 1.0 indicates durable demand and a strengthening pipeline that can convert into multi-period managed services and project revenue. Steady bookings support near- to medium-term revenue recovery if conversion and delivery execution remain consistent.
Strategic shift to AI productization and security IP
Moving from pure services to productized AI/automation and commercialized security IP can create higher-margin, repeatable revenue streams. Demonstrated internal AI scale and automated SOC capabilities provide durable differentiation and a platform to monetize at enterprise scale.
Negative Factors
Ongoing revenue contraction
Persistent top-line decline undermines operating leverage and compresses gross profit dollars, limiting margin expansion and the firm's ability to fund transformation. Continued revenue shrinkage increases reliance on cost cuts and execution to restore sustainable growth.
Elevated leverage and balance-sheet constraints
High leverage relative to equity constrains strategic options, raises interest expense sensitivity, and reduces flexibility for M&A or heavy reinvestment. Even with recent reductions, elevated debt makes the company vulnerable if margins or cash flow weaken.
Execution risk scaling Fast Track and sales enablement
Converting AI/product initiatives into durable revenue depends on recruiting, retaining and scaling specialized product and GTM teams. Execution risk is structural: mis-scaled delivery or sales adoption delays could prevent margin gains and prolong top-line recovery.
DXC Technology (DXC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.08B
Dividend YieldN/A
Average Volume (3M)2.85M
Price to Earnings (P/E)6.1
Beta (1Y)0.94
Revenue Growth-4.13%
EPS Growth2143.48%
CountryUS
Employees130,000
SectorTechnology
Sector Strength88
IndustryInformation Technology Services
Share Statistics
EPS (TTM)0.96
Shares Outstanding169,759,960
10 Day Avg. Volume2,694,224
30 Day Avg. Volume2,849,783
Financial Highlights & Ratios
PEG Ratio0.02
Price to Book (P/B)0.95
Price to Sales (P/S)0.24
P/FCF Ratio3.75
Enterprise Value/Market Cap2.50
Enterprise Value/Revenue0.41
Enterprise Value/Gross Profit2.08
Enterprise Value/Ebitda2.44
Forecast
1Y Price Target
$15.00Price Target Upside22.05% Upside
Rating ConsensusHold
Number of Analyst Covering7
EPS Forecast (FY)3.19
Revenue Forecast (FY)$12.67B
DXC Technology Business Overview & Revenue Model
Company DescriptionDXC Technology Company, together with its subsidiaries, provides information technology services and solutions primarily in North America, Europe, Asia, and Australia. It operates in two segments, Global Business Services (GBS) and Global Infrastructure Services (GIS). The GBS segment offers a portfolio of analytics services and extensive partner ecosystem that help its customers to gain rapid insights, automate operations, and accelerate their digital transformation journeys; and software engineering, consulting, and data analytics solutions that enable businesses to run and manage their mission-critical functions, transform their operations, and develop new ways of doing business. It also uses various technologies and methods to accelerate the creation, modernization, delivery, and maintenance of secure applications allowing customers to innovate faster while reducing risk, time to market, and total cost of ownership. In addition, this segment offers business process services, which include integration and optimization of front and back office processes, and agile process automation. The GIS segment adapts legacy apps to cloud, migrate the right workloads, and securely manage their multi-cloud environments; and offers security solutions help predict attacks, proactively respond to threats, and ensure compliance, as well as to protect data, applications, and infrastructure. It also provides IT outsourcing services to help customers securely and cost-effectively run mission-critical systems and IT infrastructure. In addition, this segment offers workplace services to fit its customer's employee, business, and IT needs from intelligent collaboration; and modern device management, digital support services, and mobility services. DXC Technology Company is headquartered in Ashburn, Virginia.
How the Company Makes MoneyDXC makes money primarily by selling IT services under multi-year contracts and shorter project engagements, with revenue largely recognized as services are delivered. Its core revenue model is service fees billed on a recurring basis for managed services (e.g., operating and supporting clients’ IT infrastructure, cloud and workplace services, security operations, and application maintenance) and on a time-and-materials, fixed-price, or milestone basis for consulting and project work (e.g., application development/modernization, cloud migrations, data/analytics implementations, and cybersecurity programs). A significant portion of DXC’s earnings comes from large enterprise accounts where it embeds delivery teams and tools to provide ongoing operations, often under service-level agreements (SLAs) that can include performance incentives or penalties. DXC also generates revenue from reselling or integrating third-party technology (such as cloud platforms, software, and security tools) in the course of delivering solutions; in these cases it may earn implementation fees and, depending on contract structure, pass-through revenue for third-party costs. Key factors affecting how DXC earns include contract renewals and scope expansions with existing clients, wins of new outsourcing/modernization deals, the mix of higher-margin consulting versus lower-margin pass-through or commoditized services, labor utilization and delivery efficiency (including the use of offshore/nearshore delivery), and partnerships with major technology vendors used to deliver cloud, security, and enterprise application solutions.
DXC Technology Key Performance Indicators (KPIs)
Any
Revenue by Geography
Breaks down revenue across different regions, revealing where the company is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Breaks down revenue across different regions, revealing where the company is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Data provided by:
The Fly
The FlyDXC Technology Earnings Call Summary
Earnings Call Date:Jan 29, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:May 14, 2026
Earnings Call Sentiment Neutral
The call presented a balanced picture: strong strategic progress on AI, productization (Fast Track), meaningful operational proofs (customer-zero AI deployment, SOC metrics), improved bookings momentum and solid cash generation and balance-sheet actions. However, these positives are offset in the near term by continuing revenue declines across segments (total revenue -4.3% YoY; GIS -6.2%; CES -3.6%), guidance for further organic decline in Q4, and margin pressure driven by investments and short-term booking delays. Execution risk — including the need to scale product teams and global sales enablement — is a key determinant of whether the strategic initiatives will translate into sustained top-line recovery.Q3-2026 Updates
Positive Updates
AI-First Strategic Shift and Fast Track Initiative
Launched Fast Track AI-infused offerings focused on repeatable IP and productized solutions with a target to reach 10% of run-rate revenue by end of Q2 FY2029; architecture enables moving from idea to production in weeks and preserves legacy systems by layering AI rather than ripping and replacing.
Customer Zero AI Deployment and Operational Scale
DXC deployed AI across the company (115,000 employees), integrating every major AI provider and routing work to the best model; this internal scale is being used as proof-points for productization and GTM.
Demonstrated Security Capability
Agentic security operations center protects DXC from ~4.5 million threats daily with over 90% of alerts resolved automatically, and the capability is being commercialized for banking, healthcare and government customers.
Hogan / Core Ignite Banking Platform Reach and Partnerships
Hogan processes ~$2.5 trillion in transactions per day across ~300 million accounts; introduced Core Ignite to modernize bank experiences without core replacement and announced partnerships (Ripple, Euronet, Aptys, Splitit) to enable real-time payments and new product flows.
Notable New Logo and GTM Improvements
Won a major master-vendor deal with the London Metropolitan Police to lead enterprise transformation (ERP and resource management modernization); launched refreshed brand and first centralized sales enablement function with early positive third-party adviser feedback about differentiation.
Bookings and Order-Book Momentum
Q3 book-to-bill improved to 1.12 with trailing 12-month book-to-bill at 1.02 (fourth consecutive quarter >1); CES book-to-bill 1.20 (trailing 12-month 1.13) and GIS quarterly book-to-bill 1.09, indicating improved booking activity and pipeline strength.
Solid Cash Generation and Strengthened Balance Sheet
Generated $266 million in free cash flow in Q3 and $603 million YTD (up from $576M prior year), on pace for FY guide of ~$650M; cash balance increased to ~$1.7 billion, total debt declined ~$465 million to ~$3.6 billion, and net debt reduced by ~ $970 million.
Shareholder Returns and Liability Reduction
Year-to-date share repurchases totaled $190 million (including $65M in Q3) with planned FY repurchases of ~$250M; prepaid $300M of a $700M bond due in September and paid down $47M of capital lease in the quarter (>$450M capital lease reduction since FY2025).
Profitability Metrics Came In Slightly Ahead
Adjusted EBIT margin in Q3 was 8.2%, slightly above the high end of guidance; non-GAAP EPS $0.96, up from $0.92 year-over-year, helped by lower share count, net interest and tax dynamics.
Negative Updates
Revenue Decline — Total Company
Total revenue for Q3 was $3.2 billion, declining 4.3% year-over-year; updated full-year FY2026 organic revenue decline expected at approximately 4.3% with Q4 organic revenue guide of -4% to -5%.
Segment Revenue Pressure — GIS and CES
GIS (50% of revenue) declined 6.2% year-over-year in Q3 (in line with full-year expectations); CES (40% of revenue) declined 3.6% year-over-year, reflecting continued pressure on short-term discretionary engagements despite strength in longer-term bookings.
U.S. Market Deceleration and Short-Term Booking Delays
The U.S. showed declining performance while rest-of-world improved; short-term project bookings were below expectations, causing delays in revenue recognition and pushing some expected Q3 wins into Q4 (and some Q4 bookings into later periods).
Margin Impact from Investments
Adjusted EBIT margin declined ~70 basis points year-over-year (Q3 at 8.2%) primarily due to planned higher investment levels in offering development and marketing to support future growth; Q4 margin guidance is lower (6.5%–7.5%).
Insurance BPS Delays and Mixed Insurance Performance
Insurance (10% of revenue) grew 3.2% YoY driven by software, but a couple of large BPS opportunities were delayed from Q3 into Q4, negatively impacting near-term revenue in that subsegment and leaving BPS largely flat.
Reliance on Execution and Talent to Scale Fast Track
Management noted the key constraint for Fast Track growth is the availability of product teams that can execute; scaling the new sales enablement and consistent execution across a large global sales organization will take time and discipline.
Company Guidance
DXC's guidance for Q4 FY2026 calls for organic revenue down 4–5% (updated FY26 organic decline ~4.3%), with CES down low-single-digits, GIS down mid-single-digits and Insurance up low-single-digits; adjusted EBIT margin of 6.5–7.5% for Q4 (FY26 ~7.5%), non‑GAAP diluted EPS $0.65–$0.75 (FY26 ~ $3.15), and full‑year free cash flow roughly $650 million. The company noted Q3 metrics of $3.2B revenue (‑4.3% YoY), adjusted EBIT margin 8.2% (‑70 bps YoY), non‑GAAP EPS $0.96, Q3 book‑to‑bill 1.12 (TTM 1.02), CES book‑to‑bill 1.2 (TTM 1.13), GIS book‑to‑bill 1.09, CES = 40% of revenue (‑3.6% YoY), GIS = 50% (‑6.2% YoY), Insurance = 10% (+3.2% YoY). Cash/capital actions include Q3 FCF $266M and YTD $603M (on pace for ~$650M), cash ~$1.7B, total debt ~ $3.6B (down $465M), net debt reduced ~ $970M, YTD buybacks $190M (including $65M in Q3) with $60M planned in Q4 (FY repurchases ~ $250M), and H1 FY27 plans to retire $400M of bonds and repurchase $250M of stock; management also targets Fast Track offerings to reach ~10% of run‑rate revenue by end of Q2 FY2029.DXC Technology Financial Statement Overview
Summary
Profitability has improved to positive operating profit/net income and cash generation remains solid, but revenue continues to contract and leverage remains elevated, limiting flexibility and making the recovery less durable.Income Statement
TTM (Trailing-Twelve-Months) profitability has improved versus the prior loss-making period, with positive operating profit and net income and a healthier EBITDA margin. However, the core top-line trajectory remains weak: revenue continues to decline (TTM down sharply), and gross profit dollars compress materially versus prior annual periods, which limits operating leverage and makes the turnaround more fragile.56
Neutral
Balance Sheet
Leverage remains a key constraint, with debt running above equity and debt-to-equity elevated across the period. While equity has been relatively stable and returns on equity improved back to positive in the most recent periods, the balance sheet still reflects meaningful financial risk and reduced flexibility if earnings soften or restructuring costs rise.49
Neutral
Cash Flow
Cash generation is a relative strength: TTM (Trailing-Twelve-Months) operating cash flow and free cash flow are solid and remain positive, supporting liquidity and potential debt reduction. The key watchouts are the step-down in free cash flow growth (declining in the latest period) and that cash conversion versus accounting earnings is not consistently strong, signaling potential volatility in working capital or one-time items.63
Positive
| Breakdown | TTM | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 12.68B | 12.87B | 13.67B | 14.43B | 16.27B | 16.27B |
| Gross Profit | 2.50B | 3.10B | 3.09B | 3.18B | 3.58B | 3.58B |
| EBITDA | 2.13B | 2.21B | 1.84B | 866.00M | 3.09B | 3.09B |
| Net Income | 423.00M | 389.00M | 91.00M | -568.00M | 718.00M | 718.00M |
Balance Sheet | ||||||
| Total Assets | 13.18B | 13.21B | 13.87B | 15.85B | 20.14B | 20.14B |
| Cash, Cash Equivalents and Short-Term Investments | 1.73B | 1.80B | 1.22B | 1.86B | 2.67B | 2.67B |
| Total Debt | 4.79B | 4.55B | 4.87B | 5.37B | 6.17B | 6.17B |
| Total Liabilities | 9.76B | 9.71B | 10.80B | 12.03B | 14.76B | 14.76B |
| Stockholders Equity | 3.15B | 3.23B | 2.81B | 3.50B | 5.05B | 5.05B |
Cash Flow | ||||||
| Free Cash Flow | 1.10B | 822.00M | 954.00M | 1.15B | 1.25B | -137.00M |
| Operating Cash Flow | 1.32B | 1.40B | 1.36B | 1.42B | 1.50B | 124.00M |
| Investing Cash Flow | -534.00M | -512.00M | -491.00M | -635.00M | -60.00M | 4.67B |
| Financing Cash Flow | -734.00M | -317.00M | -1.49B | -1.51B | -1.82B | -5.48B |
DXC Technology Technical Analysis
Negative
12.29
Price Trends
13.93
Negative
13.84
Negative
14.11
Negative
Market Momentum
-0.44
Negative
41.26
Neutral
36.56
Neutral
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 12.29 is below the 20-day moving average (MA) of 12.75, below the 50-day MA of 13.93, and below the 200-day MA of 14.11, indicating a bearish trend. The MACD of -0.44 indicates Negative momentum. The RSI at 41.26 is Neutral, neither overbought nor oversold. The STOCH value of 36.56 is Neutral, 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 38 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $56.15B | 24.55 | 29.68% | 2.58% | 4.62% | 1.06% | |
73 Outperform | $6.61B | 14.72 | 21.81% | 1.41% | 7.40% | -14.45% | |
70 Outperform | $7.69B | 30.32 | 10.27% | ― | 14.26% | -15.49% | |
68 Neutral | $29.86B | 17.90 | 14.84% | 1.46% | 7.44% | -4.57% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
59 Neutral | $2.08B | 6.07 | 13.41% | ― | -4.13% | 2143.48% | |
53 Neutral | $2.85B | 26.53 | 20.43% | ― | -1.90% | ― |
* Technology Sector Average
DXC
DXC Technology
12.29
-4.78
-28.00%
CTSH
Cognizant
62.43
-15.67
-20.06%
EPAM
Epam Systems
141.98
-47.23
-24.96%
G
Genpact
38.75
-9.78
-20.16%
INFY
Infosys
13.87
-4.18
-23.15%
KD
Kyndryl Holdings Incorporation
12.66
-21.34
-62.76%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.