DXC Technology Company’s (NYSE:DXC) announced its latest earnings update in March 2018, which showed that the business finally turned profitable after delivering negative earnings on average over the past few years. Below, I’ve presented key growth figures on how market analysts predict DXC Technology’s earnings growth outlook over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in. See our latest analysis for DXC Technology
Analysts’ outlook for this coming year seems rather subdued, with earnings expanding by a single digit 0.66%. The growth outlook in the following year seems much more positive with rates reaching double digit 15.55% compared to today’s earnings, and finally hitting US$2.37B by 2021.
Although it’s useful to understand the rate of growth each year relative to today’s value, it may be more insightful to determine the rate at which the earnings are moving every year, on average. The pro of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of DXC Technology’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I put a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 8.60%. This means that, we can assume DXC Technology will grow its earnings by 8.60% every year for the next couple of years.
For DXC Technology, I’ve compiled three pertinent aspects you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is DXC worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether DXC is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of DXC? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.