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DXC Technology (DXC) to Post Q4 Earnings: What's in the Offing?

DXC Technology DXC is scheduled to report fourth-quarter fiscal 2022 results on May 25.

For the fourth quarter of fiscal 2022, the company anticipates revenues between $4.11 billion and $4.15 billion. The Zacks Consensus Estimate for fourth-quarter revenues stands at $4.13 billion, indicating a year-over-year decline of 5.8%.

DXC anticipates non-GAAP earnings between 98 cents and $1.03 per share. The consensus mark for earnings is pegged at $1 per share, suggesting a 35.1% year-over-year increase.

The company’s earnings outpaced estimates in three of the trailing four quarters while matching the same on one occasion, the average surprise being 6.2%.

Let’s see how things have shaped up before the upcoming announcement.

DXC Technology Company. Price and EPS Surprise

DXC Technology Company. Price and EPS Surprise
DXC Technology Company. Price and EPS Surprise

DXC Technology Company. price-eps-surprise | DXC Technology Company. Quote

Factors to Consider

DXC’s fiscal fourth-quarter performance is likely to have benefited from strength in the digital business and partnerships, which is helping it expand in the cloud computing space. Increased IT spending is anticipated to have contributed to the top line in the quarter to be reported.

However, DXC’s fiscal fourth-quarter top line is likely to reflect the negative impact of price concessions, previous business terminations and runoffs. Apart from this, a weak traditional business might have weighed on the to-be-reported quarter's performance. However, the sequential revenue stabilization is expected to have continued.

Margins are anticipated to have witnessed a sequential and year-over-year expansion during the period in discussion, primarily driven by the company’s cost-saving initiatives and lower interest expenses. DXC projects the adjusted EBIT margin in the range of 8.7-8.9% in the fourth quarter.

We anticipate that the company is likely to report a book-to-bill ratio of more than 1 during the fourth quarter. DXC is likely to have witnessed a more than $25 million reduction in interest expenses, chiefly driven by the refinancing of high-rate bonds.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for DXC this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.

DXC currently carries a Zacks Rank of #4 (Sell) and has an Earnings ESP of -3.84%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Per our model, Commercial Metals CMC, Dynagas LNG Partners DLNG and The Kroger Company KR have the right combination of elements to post an earnings beat in their upcoming releases.

Commercial Metals sports a Zacks Rank #1 and has an Earnings ESP of +38.66%. The company is scheduled to report third-quarter fiscal 2022 results on Jun 16. Commercial Metals’ earnings surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same on one occasion, the average surprise being 16%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for CMC’s third-quarter earnings is pegged at $1.54 per share, indicating a year-over-year increase of 48.1%. The consensus mark for revenues stands at $2.19 billion, suggesting a year-over-year increase of 18.9%.

Dynagas LNG Partners is expected to report first-quarter 2022 results on Jun 16. The company carries a Zacks Rank #2 and has an Earnings ESP of +3.03% at present. Dynagas LNG Partners’ earnings beat the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same on one occasion, the average surprise being 8.8%.

The Zacks Consensus Estimate for quarterly earnings is pegged at 17 cents per share, suggesting a year-over-year decline of 19.1%. DLNG’s quarterly revenues are estimated to decline by 6.2% year over year to $31.4 million.

Kroger currently carries a Zacks Rank #2 and has an Earnings ESP of +2.95%. The company is anticipated to report its first-quarter fiscal 2023 results on Jun 16. Kroger’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 22.1%.

The Zacks Consensus Estimate for Kroger’s first-quarter earnings stands at $1.27 per share, implying a year-over-year increase of 6.7%. KR is estimated to report revenues of $43.22 billion, suggesting growth of 4.7% from the year-ago quarter.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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The Kroger Co. (KR) : Free Stock Analysis Report
 
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