DXC Technology DXC reported second-quarter fiscal 2025 earnings of 93 cents per share, beating the Zacks Consensus Estimate by 29.2%. The figure increased 32.9% year over year.
DXC’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 15.7%.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Revenues of $3.24 billion beat the Zacks Consensus Estimate by 0.94% but decreased 5.7% year over year. On an organic basis, revenues declined 5.6% year over year.
Following its better-than-expected third-quarter performance, DXC increased its guidance for fiscal 2025. This makes us optimistic about DXC’s near-term prospects, which might drive its shares up. After reporting its second-quarter earnings, DXC shares rose nearly 2% in after-hours trading, providing a slight recovery from its recent underperformance. Shares of DXC Technology have lost 1.2% year to date, underperforming the Zacks Computer & Technology sector’s return of 28.5%.
DXC Technology Company. Price, Consensus and EPS Surprise
DXC Technology Company. price-consensus-eps-surprise-chart | DXC Technology Company. Quote
DXC Technology’s Q2 Details
Segment-wise, revenues from Global Business Services declined 2% on a year-over-year basis to $1.68 billion. On an organic basis, the division’s revenues increased 1.6% year over year. The organic growth in revenues was mainly driven by traction in insurance software and BPS business.
GIS revenues were $1.56 billion in the fiscal second quarter, down 9.4% year over year. On an organic basis, the division’s revenues decreased 9.6% year over year. The GIS division witnessed revenue declines across the Cloud Infrastructure, ITO, and Security divisions.
The company’s non-GAAP gross profit increased 1.1% to $814 million from $805 million reported in the year-ago quarter due to efficient resource management in GBS and optimization of data centers and networks in GIS. DXC’s non-GAAP operating income increased to $279 million in the fiscal second quarter from $251 million in the year-ago quarter.
Balance Sheet & Cash Flow
DXC exited the fiscal second quarter with $1.25 billion in cash and cash equivalents compared with $1.32 billion in the previous quarter. The long-term debt balance (net of current maturities) was $3.83 billion as of Sept. 30, 2024, up from $3.76 billion as of June 30, 2024.
In the fiscal second quarter, DXC generated an operating cash flow of $195 million and a free cash flow of $48 million.
Q3 & FY25 Guidance
For the fiscal third quarter, the company anticipates revenues between $3.2 billion and $3.3 billion. The adjusted EBIT margin is expected in the band of 7.0-7.5%. DXC projects adjusted earnings per share between 75 cents and 80 cents for the fiscal third quarter. The Zacks Consensus Estimate for revenues and earnings is pegged at $3.21 billion and 69 cents per share, respectively.
For fiscal 2025, DXC now expects revenues between $12.9 billion and $13.1 billion compared with the previous guidance of $12.74-$13.02 billion. The company now projects the adjusted EBIT margin in the range of 7-7.5%, up from the previous guidance of 6.5-7%. It now forecasts adjusted EPS between $3 to $3.25 compared with the previous guidance of $2.75-$3. The consensus mark for revenues and earnings per share is pegged at $12.88 billion and $2.89, respectively.
DXC’s Zacks Rank & Stocks to Consider
DXC currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Shopify SHOP, Fortinet FTNT and CyberArk CYBR. While Shopify and CyberArk sport Zacks Rank #1 (Strong Buy) each, FTNT carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The consensus mark for Shopify’s 2024 earnings has been revised upward by 13 cents to $1.12 per share over the past 90 days, indicating a 51.31% year-over-year increase. The long-term expected earnings growth rate for the stock stands at 39.2%. Shares of SHOP have gained 2.7% in the year-to-date period.
The Zacks Consensus Estimate for Fortinet’s 2024 earnings has been revised upward by a penny to $2.01 per share in the past 60 days, indicating an increase of 23.31% on a year-over-year basis. It has a long-term earnings growth expectation of 16.3%. Shares of FTNT have jumped 40.8% in the year-to-date period.
The Zacks Consensus Estimate for CyberArk’s fiscal 2024 earnings has been revised upward by a penny to $2.30 per share in the past seven days, suggesting a year-over-year increase of 105.4%. It has a long-term earnings growth expectation of 33.4%. Shares of CYBR have plunged 21.3% in the year-to-date period.
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