DXC Technology Beats Earnings Estimates, But Faces Market Challenges Ahead
Quarterly Results Show Growth
DXC Technology Company (DXC) reported quarterly earnings of $0.93 per share, exceeding the Zacks Consensus Estimate of $0.72 per share. This marks an increase from last year’s earnings of $0.70 per share. These figures are adjusted for non-recurring items.
This quarterly performance reflects an earnings surprise of 29.17%. In the previous quarter, DXC was anticipated to earn $0.57 per share but actually achieved $0.74, resulting in a surprise of 29.82%.
Over the past four quarters, the company has outperformed consensus EPS estimates each time.
For the quarter ending September 2024, DXC Technology generated revenues of $3.24 billion, surpassing the Zacks Consensus Estimate by 1.03%. This figure has decreased slightly compared to year-ago revenues of $3.44 billion. The company has consistently exceeded consensus revenue expectations over the last four quarters.
The future trend of DXC’s stock price will largely depend on insights shared during the upcoming earnings call.
Since the start of the year, DXC Technology shares have dropped about 6.3%, while the S&P 500 has gained 24.3%.
Future Prospects and Consensus Outlook
Given DXC Technology’s underperformance relative to the market, investors are left wondering what lies ahead for the stock.
There are no straightforward answers, but examining the company’s earnings outlook can provide some insight. This outlook encompasses current consensus earnings expectations for upcoming quarters and recent changes to these expectations.
Historical data indicates a strong link between short-term stock performance and adjustments in earnings estimates. Investors can follow these revisions independently or utilize a reliable tool like the Zacks Rank, which has a notable history of effectively leveraging earnings estimate changes.
Following this latest earnings report, the trend for estimate revisions at DXC Technology appears mixed. While these trends may shift, the present outlook results in a Zacks Rank of #3 (Hold), indicating that investors should expect shares to perform in line with the market in the near term.
Looking ahead, the current consensus EPS estimate stands at $0.69 on revenues of $3.21 billion for the upcoming quarter, and $2.89 on revenues of $12.88 billion for the entire fiscal year.
Investors should also consider that the industry’s overall outlook can significantly influence stock performance. Currently, the Computers – IT Services sector ranks in the top 17% of more than 250 Zacks industries. Research suggests that the top half of Zacks-ranked industries outperform the bottom half by over two to one.
Another player in the same sector, Cerence (CRNC), has yet to release its results for the quarter ended September 2024.
This automotive AI developer is expected to report a quarterly loss of $0.32 per share, reflecting a 455.6% decline compared to last year. The consensus EPS estimate has remained stable over the last month.
Cerence’s projected revenues are $48.14 million, representing a 40.4% decline from the same period last year.
Investing Insights and Recommendations
As a valuable opportunity surfaces, five Zacks experts have each identified a stock they believe could increase by over 100% in the near future. Among these, Sheraz Mian, the Director of Research, selected one stock he predicts has the potential for significant growth.
This company targets the millennial and Gen Z demographics and achieved nearly $1 billion in revenue just last quarter. Recent market adjustments present an opportune moment for potential investors. Although not all Zacks picks succeed, this one may greatly exceed previous Zacks recommendations, such as Nano-X Imaging, which rose by 129.6% in under nine months.
Free: Discover Our Top Stock and 4 Runners Up
Looking for the latest recommendations from Zacks Investment Research? You can download the report titled “5 Stocks Set to Double” for free.
DXC Technology Company (DXC): Free Stock Analysis Report
Cerence Inc. (CRNC): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
