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DXC Technology (DXC)
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DXC Technology (DXC) AI Stock Analysis

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DXC

DXC Technology

(NYSE:DXC)

Rating:71Outperform
Price Target:
$16.00
▲(10.34% Upside)
DXC Technology's overall score reflects its financial recovery and undervaluation, which are significant strengths. However, technical indicators suggest limited momentum, and the earnings call highlighted ongoing challenges, particularly in revenue and EBIT margin. Continued focus on strategic improvements and cost management will be crucial for future growth.
Positive Factors
Cash Flow
Free cash flow less capital leases improved 19% in FY25 to $389M and this is forecasted to be up nearly 10% in FY26.
Client Engagement
Improved delivery quality has begun to yield benefit, with clients looking to broaden their engagement with DXC in more strategic areas such as Gen AI.
Workforce Development
Gen AI talent now constitutes ~42% of the company's workforce (~50K professionals), which signals the company's commitment to upskilling talent.
Negative Factors
Earnings
The needed investments weigh on margin and this flows through to earnings per share, which is below Street expectations.
Growth Targets
FY26 growth targets underwhelm investors and suggest a more gradual return to growth than expected.
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)

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 Technology generates revenue primarily through its IT services and solutions, which are delivered on a project basis, through managed services contracts, and via subscription models. Key revenue streams include consulting services, application development and management, cloud services, and infrastructure management. The company also benefits from long-term contracts with clients, providing stable income over extended periods. Significant partnerships with technology providers, such as Microsoft, Amazon Web Services, and Oracle, enhance DXC's service offerings and contribute to revenue growth by enabling access to advanced technologies and expanding its market reach.

DXC Technology Earnings Call Summary

Earnings Call Date:Jul 31, 2025
(Q1-2026)
|
% Change Since: |
Next Earnings Date:Oct 29, 2025
Earnings Call Sentiment Neutral
The earnings call presented a balanced view with strong bookings growth and recognition in AI leadership as positives. However, the revenue decline and challenges in the GIS segment, along with a decrease in adjusted EBIT margin, indicate areas needing improvement. Overall, the company shows potential for growth, but current challenges suggest a neutral outlook.
Q1-2026 Updates
Positive Updates
Bookings Growth and Strong Pipeline
Bookings increased 14% year-over-year, marking the third consecutive quarter of double-digit growth, with a trailing 12-month book-to-bill ratio of 1.06. Strong bookings in Europe and Asia Pacific driven by public sector strength.
Recognition as Emerging AI Leader
DXC was recognized by Gartner as an Emerging Leader in Generative AI Consulting and Implementation Services, highlighting the strength of their AI capabilities.
Strategic Partnerships and AI Integration
DXC entered a strategic partnership with Boomi to enhance AI-driven integration automation, improving end-to-end connectivity for clients.
Improved Free Cash Flow
Free cash flow increased to $97 million from $45 million in the previous year, driven by lower capital requirements and efficient capital management.
Positive Internal AI Implementation
Internal use of AI has resulted in significant operational improvements, including a 70% reduction in security investigation time and a 30% reduction in marketing content creation time.
Negative Updates
Revenue Decline
Total revenue declined 4.3% year-to-year on an organic basis, with CES and GIS segments showing year-over-year declines of 4.4% and 5.7% respectively.
Adjusted EBIT Margin Decrease
Adjusted EBIT margin decreased slightly by 10 basis points year-over-year to 6.8%.
Non-GAAP EPS Decline
Non-GAAP EPS fell from $0.75 last year to $0.68, mainly due to lower adjusted EBIT and higher taxes.
Deferred GIS Deals
Bookings for GIS were affected by the deferral of several large deals, resulting in a book-to-bill ratio of 0.7 for the quarter.
Company Guidance
During the call, DXC Technology provided guidance for the second quarter and full fiscal year 2026, highlighting several key metrics. The company expects total organic revenue to decline between 3% and 5% for the fiscal year, with reported revenue projected to be between $12.6 billion and $12.9 billion, benefiting from currency tailwinds. The adjusted EBIT margin is anticipated to be between 7% and 8%, while non-GAAP diluted EPS is expected to range from $2.85 to $3.35, reflecting an increase from the prior guide due to higher revenue projections. For the second quarter, DXC forecasts organic revenue to decline 3.5% to 4.5%, with an adjusted EBIT margin of 6.5% to 7.5% and non-GAAP diluted EPS between $0.65 and $0.75. The company also aims to generate approximately $600 million in free cash flow for the full year, emphasizing their confidence in achieving these targets despite economic uncertainties.

DXC Technology Financial Statement Overview

Summary
DXC Technology's financial performance is improving with better profitability, reduced leverage, and strong cash flow management. However, the consistent decline in revenue remains a concern despite positive margins and reduced debt levels.
Income Statement
68
Positive
DXC Technology has shown a consistent decline in revenue over the past several years, with a noticeable drop from $19.58 billion in 2020 to $12.87 billion in 2025. The gross profit margin has remained stable, but the net profit margin has improved significantly from a loss to 3.02% in 2025, indicating better cost management and operational efficiency. EBIT and EBITDA margins have been volatile, but recent improvements signal a positive trend.
Balance Sheet
72
Positive
The company's balance sheet shows a reduction in total debt from $11.49 billion in 2020 to $1.55 billion in 2025, significantly improving the debt-to-equity ratio. Stockholders' equity has increased, leading to a healthier equity ratio and enhancing financial stability. However, the total assets have decreased over the years, which might limit future growth opportunities.
Cash Flow
75
Positive
DXC Technology's cash flow from operations has remained strong, with a noticeable improvement in free cash flow, now at $1.15 billion in 2025. The free cash flow to net income ratio is robust, indicating efficient cash generation relative to net earnings. The company has effectively managed capital expenditures, contributing to positive free cash flow growth.
BreakdownTTMDec 2025Dec 2024Dec 2023Dec 2022Dec 2021
Income Statement
Total Revenue12.79B12.87B13.67B14.43B16.27B17.73B
Gross Profit3.16B3.10B3.09B3.18B3.58B3.64B
EBITDA2.17B2.21B1.81B942.00M3.17B3.07B
Net Income379.00M389.00M91.00M-566.00M718.00M-146.00M
Balance Sheet
Total Assets13.44B13.21B13.87B15.85B20.14B22.04B
Cash, Cash Equivalents and Short-Term Investments1.79B1.80B1.22B1.86B2.67B2.97B
Total Debt4.80B4.55B4.87B5.37B6.17B6.97B
Total Liabilities10.01B9.71B10.80B12.03B14.76B16.73B
Stockholders Equity3.17B3.23B2.81B3.50B5.05B5.31B
Cash Flow
Free Cash Flow742.00M822.00M954.00M960.00M952.00M-391.00M
Operating Cash Flow1.03B1.40B1.36B1.42B1.50B124.00M
Investing Cash Flow-232.00M-512.00M-491.00M-635.00M-60.00M4.67B
Financing Cash Flow-408.00M-317.00M-1.49B-1.51B-1.82B-5.48B

DXC Technology Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price14.50
Price Trends
50DMA
14.32
Positive
100DMA
14.85
Negative
200DMA
17.30
Negative
Market Momentum
MACD
0.10
Negative
RSI
57.54
Neutral
STOCH
82.97
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DXC, the sentiment is Neutral. The current price of 14.5 is above the 20-day moving average (MA) of 13.90, above the 50-day MA of 14.32, and below the 200-day MA of 17.30, indicating a neutral trend. The MACD of 0.10 indicates Negative momentum. The RSI at 57.54 is Neutral, neither overbought nor oversold. The STOCH value of 82.97 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
$7.82B14.8921.86%1.43%7.37%-14.64%
76
Outperform
$3.23B20.1121.23%1.94%26.15%
71
Outperform
$2.60B7.0712.60%-4.93%497.03%
71
Outperform
$2.30B16.657.71%-6.31%-23.56%
71
Outperform
$3.31B14.275.59%2.54%11.31%-16.02%
61
Neutral
$35.51B8.11-11.05%1.89%8.55%-8.72%
48
Neutral
$7.21B26.1726.55%-3.44%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
DXC
DXC Technology
14.50
-6.32
-30.36%
G
Genpact
44.97
7.20
19.06%
ASGN
ASGN
52.45
-37.29
-41.55%
WNS
WNS
75.40
18.51
32.54%
CNXC
Concentrix
52.46
-18.39
-25.96%
KD
Kyndryl Holdings Incorporation
31.77
9.16
40.51%

DXC Technology Corporate Events

Shareholder Meetings
DXC Technology Holds Annual Stockholders Meeting
Neutral
Jul 24, 2025

On July 22, 2025, DXC Technology held its Annual Meeting of Stockholders, where three key proposals were voted on. All ten director nominees were elected to serve until the 2026 annual meeting, Deloitte & Touche LLP was ratified as the independent accounting firm for the fiscal year ending March 31, 2026, and the compensation of the company’s named executive officers was approved on an advisory basis.

Business Operations and StrategyFinancial Disclosures
DXC Technology Restructures Financial Reporting Segments
Neutral
Jul 24, 2025

Effective April 1, 2025, DXC Technology restructured its financial reporting into three segments: Consulting & Engineering Services, Global Infrastructure Services, and Insurance Services, to better align with its operational structure and resource allocation. This change aims to enhance transparency and efficiency in reporting, potentially impacting the company’s market positioning by showcasing its focused approach in delivering specialized IT services across different sectors.

Executive/Board Changes
DXC Technology EVP Howard Boville Departs Company
Neutral
Jul 8, 2025

On July 1, 2025, Howard Boville, the Executive Vice President of Consulting & Engineering Services at DXC Technology, departed the company. In connection with his departure, Boville will receive a separation payment and benefits as outlined in the company’s 2025 proxy statement, under the terms for non-change of control executive officer severance.

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.Date of analysis: Sep 03, 2025