DXC TECHNOLOGY CO (DXC) Stock Fundamental Analysis
NYSE:DXC - New York Stock Exchange, Inc. - US23355L1061 - Common Stock - Currency: USD
Taking everything into account, DXC scores 3 out of 10 in our fundamental rating. DXC was compared to 82 industry peers in the IT Services industry. DXC has a medium profitability rating, but doesn't score so well on its financial health evaluation. DXC is valued quite cheap, but it does not seem to be growing.
1. Profitability
1.1 Basic Checks
DXC had positive earnings in the past year.
DXC had a positive operating cash flow in the past year.
The reported net income has been mixed in the past 5 years: DXC reported negative net income in multiple years.
Each year in the past 5 years DXC had a positive operating cash flow.
1.2 Ratios
Looking at the Return On Assets, with a value of 2.95%, DXC is in line with its industry, outperforming 56.10% of the companies in the same industry.
With a decent Return On Equity value of 12.05%, DXC is doing good in the industry, outperforming 69.51% of the companies in the same industry.
DXC has a Return On Invested Capital (3.17%) which is comparable to the rest of the industry.
DXC had an Average Return On Invested Capital over the past 3 years of 2.61%. This is significantly below the industry average of 21.78%.
The last Return On Invested Capital (3.17%) for DXC is above the 3 year average (2.61%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.95% | ||
| ROE | 12.05% | ||
| ROIC | 3.17% |
ROA(3y)0.01%
ROA(5y)0.58%
ROE(3y)-0.32%
ROE(5y)2.05%
ROIC(3y)2.61%
ROIC(5y)N/A
1.3 Margins
Looking at the Profit Margin, with a value of 3.02%, DXC is in line with its industry, outperforming 53.66% of the companies in the same industry.
In the last couple of years the Profit Margin of DXC has declined.
Looking at the Operating Margin, with a value of 3.81%, DXC is in line with its industry, outperforming 50.00% of the companies in the same industry.
In the last couple of years the Operating Margin of DXC has declined.
The Gross Margin of DXC (24.09%) is worse than 71.95% of its industry peers.
DXC's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 3.81% | ||
| PM (TTM) | 3.02% | ||
| GM | 24.09% |
OM growth 3Y8.71%
OM growth 5Y-14.76%
PM growth 3Y-11.86%
PM growth 5YN/A
GM growth 3Y3.04%
GM growth 5Y0.17%
2. Health
2.1 Basic Checks
DXC has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
The number of shares outstanding for DXC has been increased compared to 1 year ago.
Compared to 5 years ago, DXC has less shares outstanding
DXC has a better debt/assets ratio than last year.
2.2 Solvency
DXC has an Altman-Z score of 0.99. This is a bad value and indicates that DXC is not financially healthy and even has some risk of bankruptcy.
DXC has a worse Altman-Z score (0.99) than 71.95% of its industry peers.
DXC has a debt to FCF ratio of 5.64. This is a neutral value as DXC would need 5.64 years to pay back of all of its debts.
DXC has a Debt to FCF ratio (5.64) which is comparable to the rest of the industry.
DXC has a Debt/Equity ratio of 1.15. This is a high value indicating a heavy dependency on external financing.
The Debt to Equity ratio of DXC (1.15) is worse than 70.73% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.15 | ||
| Debt/FCF | 5.64 | ||
| Altman-Z | 0.99 |
ROIC/WACC0.4
WACC8.01%
2.3 Liquidity
A Current Ratio of 1.22 indicates that DXC should not have too much problems paying its short term obligations.
DXC has a Current ratio of 1.22. This is in the lower half of the industry: DXC underperforms 68.29% of its industry peers.
A Quick Ratio of 1.22 indicates that DXC should not have too much problems paying its short term obligations.
The Quick ratio of DXC (1.22) is worse than 67.07% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.22 | ||
| Quick Ratio | 1.22 |
3. Growth
3.1 Past
DXC shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 8.20%, which is quite good.
DXC shows a decrease in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -9.24% yearly.
Looking at the last year, DXC shows a decrease in Revenue. The Revenue has decreased by -5.82% in the last year.
The Revenue has been decreasing by -8.05% on average over the past years.
EPS 1Y (TTM)8.2%
EPS 3Y-0.58%
EPS 5Y-9.24%
EPS Q2Q%-13.4%
Revenue 1Y (TTM)-5.82%
Revenue growth 3Y-7.5%
Revenue growth 5Y-8.05%
Sales Q2Q%-6.41%
3.2 Future
Based on estimates for the next years, DXC will show a decrease in Earnings Per Share. The EPS will decrease by -3.52% on average per year.
Based on estimates for the next years, DXC will show a decrease in Revenue. The Revenue will decrease by -2.69% on average per year.
EPS Next Y-10.59%
EPS Next 2Y-2.91%
EPS Next 3Y-3.52%
EPS Next 5YN/A
Revenue Next Year-3.45%
Revenue Next 2Y-2.57%
Revenue Next 3Y-2.69%
Revenue Next 5YN/A
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 4.50, the valuation of DXC can be described as very cheap.
Based on the Price/Earnings ratio, DXC is valued cheaper than 97.56% of the companies in the same industry.
DXC is valuated cheaply when we compare the Price/Earnings ratio to 26.43, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 5.04 indicates a rather cheap valuation of DXC.
Based on the Price/Forward Earnings ratio, DXC is valued cheaper than 95.12% of the companies in the same industry.
DXC is valuated cheaply when we compare the Price/Forward Earnings ratio to 22.17, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 4.5 | ||
| Fwd PE | 5.04 |
4.2 Price Multiples
97.56% of the companies in the same industry are more expensive than DXC, based on the Enterprise Value to EBITDA ratio.
98.78% of the companies in the same industry are more expensive than DXC, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 4.08 | ||
| EV/EBITDA | 2.32 |
4.3 Compensation for Growth
DXC's earnings are expected to decrease with -3.52% in the coming years. This may justify a cheaper valuation.
PEG (NY)N/A
PEG (5Y)N/A
EPS Next 2Y-2.91%
EPS Next 3Y-3.52%
5. Dividend
5.1 Amount
No dividends for DXC!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
15.45
+0.38 (+2.52%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners95.6%
Inst Owner Change-2.91%
Ins Owners0.64%
Ins Owner Change13.81%
Market Cap2.80B
Analysts50
Price Target21.46 (38.9%)
Short Float %4.23%
Short Ratio3.31
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
Yearly DividendN/A
Dividend Growth(5Y)N/A
DP0%
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)12.89%
Min EPS beat(2)7.63%
Max EPS beat(2)18.16%
EPS beat(4)4
Avg EPS beat(4)20.14%
Min EPS beat(4)7.63%
Max EPS beat(4)28.05%
EPS beat(8)7
Avg EPS beat(8)10.86%
EPS beat(12)9
Avg EPS beat(12)7.51%
EPS beat(16)11
Avg EPS beat(16)5.76%
Revenue beat(2)1
Avg Revenue beat(2)-0.79%
Min Revenue beat(2)-1.74%
Max Revenue beat(2)0.16%
Revenue beat(4)3
Avg Revenue beat(4)0.18%
Min Revenue beat(4)-1.74%
Max Revenue beat(4)2.02%
Revenue beat(8)4
Avg Revenue beat(8)-0.59%
Revenue beat(12)4
Avg Revenue beat(12)-0.79%
Revenue beat(16)4
Avg Revenue beat(16)-1.11%
PT rev (1m)-1.28%
PT rev (3m)-7.95%
EPS NQ rev (1m)-20.13%
EPS NQ rev (3m)-20.13%
EPS NY rev (1m)-11.03%
EPS NY rev (3m)-11.17%
Revenue NQ rev (1m)-0.96%
Revenue NQ rev (3m)-0.96%
Revenue NY rev (1m)0.43%
Revenue NY rev (3m)0.39%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 4.5 | ||
| Fwd PE | 5.04 | ||
| P/S | 0.22 | ||
| P/FCF | 4.08 | ||
| P/OCF | 2 | ||
| P/B | 0.87 | ||
| P/tB | 2.64 | ||
| EV/EBITDA | 2.32 |
EPS(TTM)3.43
EY22.2%
EPS(NY)3.07
Fwd EY19.85%
FCF(TTM)3.79
FCFY24.53%
OCF(TTM)7.71
OCFY49.92%
SpS71
BVpS17.81
TBVpS5.85
PEG (NY)N/A
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.95% | ||
| ROE | 12.05% | ||
| ROCE | 5.58% | ||
| ROIC | 3.17% | ||
| ROICexc | 3.91% | ||
| ROICexgc | 5.44% | ||
| OM | 3.81% | ||
| PM (TTM) | 3.02% | ||
| GM | 24.09% | ||
| FCFM | 5.34% |
ROA(3y)0.01%
ROA(5y)0.58%
ROE(3y)-0.32%
ROE(5y)2.05%
ROIC(3y)2.61%
ROIC(5y)N/A
ROICexc(3y)3.12%
ROICexc(5y)N/A
ROICexgc(3y)4.53%
ROICexgc(5y)N/A
ROCE(3y)4.4%
ROCE(5y)N/A
ROICexcg growth 3Y8.66%
ROICexcg growth 5Y-17.32%
ROICexc growth 3Y13.16%
ROICexc growth 5Y-10.47%
OM growth 3Y8.71%
OM growth 5Y-14.76%
PM growth 3Y-11.86%
PM growth 5YN/A
GM growth 3Y3.04%
GM growth 5Y0.17%
F-Score8
Asset Turnover0.97
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.15 | ||
| Debt/FCF | 5.64 | ||
| Debt/EBITDA | 2.05 | ||
| Cap/Depr | 54.15% | ||
| Cap/Sales | 5.52% | ||
| Interest Coverage | 1.9 | ||
| Cash Conversion | 77.49% | ||
| Profit Quality | 176.61% | ||
| Current Ratio | 1.22 | ||
| Quick Ratio | 1.22 | ||
| Altman-Z | 0.99 |
F-Score8
WACC8.01%
ROIC/WACC0.4
Cap/Depr(3y)46.69%
Cap/Depr(5y)44.53%
Cap/Sales(3y)4.88%
Cap/Sales(5y)4.74%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)8.2%
EPS 3Y-0.58%
EPS 5Y-9.24%
EPS Q2Q%-13.4%
EPS Next Y-10.59%
EPS Next 2Y-2.91%
EPS Next 3Y-3.52%
EPS Next 5YN/A
Revenue 1Y (TTM)-5.82%
Revenue growth 3Y-7.5%
Revenue growth 5Y-8.05%
Sales Q2Q%-6.41%
Revenue Next Year-3.45%
Revenue Next 2Y-2.57%
Revenue Next 3Y-2.69%
Revenue Next 5YN/A
EBIT growth 1Y-11.37%
EBIT growth 3Y0.55%
EBIT growth 5Y-21.62%
EBIT Next Year77.76%
EBIT Next 3Y19.14%
EBIT Next 5YN/A
FCF growth 1Y-9.13%
FCF growth 3Y-4.75%
FCF growth 5Y-14.28%
OCF growth 1Y2.72%
OCF growth 3Y-3.44%
OCF growth 5Y-9.87%