DXC Technology (DXC) AI Stock Analysis

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DXC Technology

(NYSE:DXC)

Rating:46Neutral

Price Target:―

DXC Technology's stock is rated at 46, reflecting its current challenges in profitability and revenue growth. While the earnings call showed some positive aspects like strong cash flow and improved bookings, the technical indicators and valuation metrics suggest caution. The company's efforts toward strategic growth are promising, but the near-term outlook remains hampered by declining revenues and profitability issues.

Positive Factors

Bookings and Growth

Two consecutive quarters of book-to-bill >1.0x in the back-half of FY25 is encouraging.

Cost Management

Margin outperformance in the quarter is largely attributed to disciplined cost management, uplifted by a one-time +50bp benefit from equity compensation savings.

Negative Factors

Earnings and Margins

The needed investments weigh on margin and this flows through to earnings per share, which is below Street expectations.

Growth Guidance

Lower-than-expected FY26 growth guidance could indicate potential deal pushouts in response to macroeconomic pressure.

Organizational Challenges

Management acknowledged that needed rebuild across functions remains 'extensive', indicating ongoing challenges within the organization.

DXC Technology (DXC) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$2.67B

Dividend YieldN/A

Average Volume (3M)1.52M

Price to Earnings (P/E)7.0

Beta (1Y)1.04

Revenue Growth-5.65%

EPS Growth78.20%

CountryUS

Employees130,000

SectorTechnology

Sector Strength76

IndustryInformation Technology Services

Share Statistics

EPS (TTM)0.84

Shares Outstanding181,266,300

10 Day Avg. Volume2,251,016

30 Day Avg. Volume1,523,944

Financial Highlights & Ratios

PEG Ratio0.01

Price to Book (P/B)0.79

Price to Sales (P/S)0.00

P/FCF Ratio3.30

Enterprise Value/Market Cap0.94

Enterprise Value/Revenue0.05

Enterprise Value/Gross Profit1.03

Enterprise Value/Ebitda0.22

Forecast

1Y Price Target

$16.71

Price Target Upside13.29% Upside

Rating ConsensusHold

Number of Analyst Covering8

DXC Technology Business Overview & Revenue Model

Company DescriptionDXC Technology (DXC) is a global IT services company that provides technology consulting, outsourcing, and support services. It operates in various sectors including healthcare, financial services, insurance, automotive, and manufacturing. DXC offers a wide range of services such as cloud computing, cybersecurity, analytics, application development, and IT infrastructure management, helping organizations leverage technology to improve their business operations and drive digital transformation.

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 faces significant challenges in profitability and revenue growth, as reflected in its income statement. The balance sheet reflects a manageable debt level, but overall financial stability could be threatened by ongoing profit issues. Cash flow performance is mixed, with strong operating cash flow but inconsistent free cash flow growth.

Income Statement

Negative

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.

Balance Sheet

Neutral

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.

Cash Flow

Neutral

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.

TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Breakdown
Income Statement		Total Revenue
13.09B	12.87B	13.67B	14.43B	16.27B	17.73B
	Gross Profit
2.46B	0.00	3.09B	3.18B	3.58B	3.64B
	EBIT
532.00M	0.00	466.00M	-659.00M	1.60B	-397.00M
	EBITDA
1.61B	2.17B	1.81B	942.00M	3.17B	3.07B
	Net Income Common Stockholders
-75.00M	389.00M	91.00M	-566.00M	718.00M	-146.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.72B	1.80B	1.22B	1.86B	2.67B	2.97B
	Total Assets
13.03B	13.21B	13.87B	15.85B	20.14B	22.04B
	Total Debt
4.50B	1.55B	4.87B	5.37B	6.17B	6.97B
	Net Debt
2.78B	-245.00M	3.64B	3.51B	3.50B	4.00B
	Total Liabilities
9.78B	9.71B	10.80B	12.03B	14.76B	16.73B
	Stockholders Equity
2.99B	3.23B	2.81B	3.82B	5.38B	5.31B
Cash Flow		Free Cash Flow
838.00M	1.15B	954.00M	960.00M	952.00M	-391.00M
	Operating Cash Flow
1.36B	1.40B	1.36B	1.42B	1.50B	124.00M
	Investing Cash Flow
-467.00M	-512.00M	-491.00M	-635.00M	-60.00M	4.67B
	Financing Cash Flow
-867.00M	-317.00M	-1.49B	-1.51B	-1.82B	-5.48B

DXC Technology Technical Analysis

Technical Analysis Sentiment

Negative

Last Price14.75

Price Trends

50DMA

15.86

Negative

100DMA

17.92

Negative

200DMA

19.37

Negative

Market Momentum

MACD

-0.20

Positive

RSI

40.41

Neutral

STOCH

30.30

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 14.75 is below the 20-day moving average (MA) of 15.72, below the 50-day MA of 15.86, and below the 200-day MA of 19.37, indicating a bearish trend. The MACD of -0.20 indicates Positive momentum. The RSI at 40.41 is Neutral, neither overbought nor oversold. The STOCH value of 30.30 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 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 (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
G	76 Outperform	$7.61B	14.81	22.21%	1.44%	7.31%	-15.86%
WNS	75 Outperform	$2.68B	14.88	21.21%	―	-0.64%	30.96%
CNXC	74 Outperform	$3.56B	13.95	6.34%	2.33%	21.67%	-17.91%
ASGN	66 Neutral	$2.35B	15.27	8.65%	―	-8.05%	-18.60%
Sector *	61 Neutral	$11.29B	10.07	-7.05%	2.96%	7.47%	-10.75%
KD	52 Neutral	$9.04B	37.58	12.09%	―	-8.20%	―
DXC	46 Neutral	$2.67B	7.00	12.88%	―	-5.65%	78.20%

* Technology Sector Average

Performance Comparison

DXC

DXC Technology

14.75

-0.41

-2.70%

Genpact

43.51

10.77

32.90%

ASGN

53.55

-39.96

-42.73%

WNS

57.79

6.33

12.30%

CNXC

Concentrix

55.71

-5.09

-8.37%

Kyndryl Holdings Incorporation

38.87

11.66

42.85%

DXC Technology Earnings Call Summary

Earnings Call Date:May 14, 2025

(Q4-2025)

% Change Since: -10.93%|

Next Earnings Date:Jul 30, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed performance for DXC Technology, with significant achievements in bookings and strategic initiatives, including key leadership alignments and a major contract win with Carnival Cruise Line. However, these positive developments were offset by continued revenue declines, profit margin reductions, and conservative fiscal 2026 guidance, reflecting ongoing challenges in certain segments and market conditions.

Q4-2025 Updates

Positive Updates

Increase in Bookings

DXC Technology reported a significant increase in bookings, up more than 20% year-over-year, resulting in a book-to-bill ratio of 1.2. The second half of the year saw a bookings growth rate of 24%.

Leadership Stability and Strategic Alignment

DXC Technology announced equity grants to ensure the continued leadership of Raul Fernandez and Rob Del Bene through fiscal year 2028, aligning compensation with long-term shareholder value creation.

Carnival Cruise Line Win

DXC Technology secured a critical infrastructure management contract with Carnival Cruise Line, highlighting its capabilities and competitive advantage.

Strong Full Year Book-to-Bill Ratio

For the full fiscal year 2025, DXC achieved a book-to-bill ratio of 1.03, indicating a strong performance in securing contracts relative to revenue.

Focus on AI Capabilities

DXC Technology emphasized its strategic positioning to leverage AI, with early but strong track records in client base transformations.

Improved Free Cash Flow Management

DXC Technology reported free cash flow of $687 million, above expectations, driven by better working capital management and lower restructuring spend.

Negative Updates

Revenue Decline

Fourth quarter revenue declined 4.2% year-over-year on an organic basis, with total revenue for the fiscal year down 4.6%.

Decline in Profit Margins

Adjusted EBIT margin for the fourth quarter was 7.3%, down 110 basis points year-over-year, driven by investments in the workforce and sales force.

Continued Challenges in GIS Segment

The GIS segment experienced a revenue decline of 6% year-over-year organically, although this was an improvement over previous declines.

Negative Revenue Guidance for Fiscal 2026

DXC Technology expects total organic revenue to decline by 3% to 5% in fiscal year 2026.

Lower Earnings Per Share

Non-GAAP EPS for the fourth quarter was $0.84, down from $0.97 in the previous year.

Company Guidance

During the DXC Technology Fourth Quarter and Fiscal Year End 2025 Earnings Call, the company provided guidance for fiscal 2026, projecting organic revenue to decline between 3% to 5%, with GBS expected to decrease by low single digits and GIS by mid-single digits. Adjusted EBIT margin is anticipated to be between 7% and 8%, while non-GAAP diluted EPS is forecasted to range from $2.75 to $3.25. The company also expects free cash flow for fiscal 2026 to be around $600 million, reflecting EBIT guidance and increased restructuring spending. For the first quarter of fiscal 2026, DXC forecasts organic revenue to decline by 4.0% to 5.5% and anticipates an adjusted EBIT margin between 6% and 7%, with non-GAAP diluted EPS expected to be between $0.55 and $0.65. The company is focusing on investing in sales, marketing, and new leadership to drive sustainable, profitable growth, and plans to return $150 million to shareholders through share repurchases.

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.