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What's in Store for DXC Technology (DXC) This Earnings Season?

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·3 min read
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DXC Technology Company DXC is scheduled to release fourth-quarter fiscal 2021 results on May 26.

For the fourth quarter, DXC expects revenues between $4.25 billion and $4.3 billion. The Zacks Consensus Estimate for quarterly revenues is pinned at $4.29 billion, calling for a 10.81% year-over-year decline.

Moreover, DXC expects non-GAAP earnings to be 65-70 cents per share. The consensus mark for earnings is 70 cents per share, suggesting a 41.67% year-over-year slump.

The company’s earnings outpaced estimates in the trailing four quarters, the average surprise being 59.65%.

Let’s see how things have shaped up prior to 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 at Play

In the fourth quarter, DXC’s top line is likely to reflect the negative impact of previous business terminations and runoffs. However, sequential revenue stabilization is expected to continue.

Additionally, DXC’s fiscal fourth-quarter performance is likely to have been affected tax payments of approximately $900 million related to divestitures conducted in the preceding quarter.

Furthermore, increased investments in the business and higher interest expenses might have weighed on the company’s bottom-line performance. The company expects net interest expenses of $60 million for the fourth quarter.

Nonetheless, margins are expected to have witnessed expansion in the quarter under review.

Also, a book-to-bill higher than 1.0 is likely to have been a positive in the fourth quarter.

The company’s focus on reducing debt via divestments is likely to have resulted in a sequentially stronger balance sheet.

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. But that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

DXC currently has a Zacks Rank of 3 and an Earnings ESP of 0.00%.

Stocks With Favorable Combinations

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat in their upcoming releases:

Digital Turbine, Inc. APPS has an Earnings ESP of +6.98 and currently, a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

NVIDIA Corporation NVDA has an Earnings ESP of +1.96% and a Zacks Rank #2, at present.

Pure Storage, Inc. PSTG has an Earnings ESP of +10.81% and currently, a Zacks Rank #3.

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