DXC TECHNOLOGY CO (DXC) Stock Fundamental Analysis
NYSE:DXC - New York Stock Exchange, Inc. - US23355L1061 - Common Stock - Currency: USD
DXC gets a fundamental rating of 3 out of 10. The analysis compared the fundamentals against 82 industry peers in the IT Services industry. While DXC is still in line with the averages on profitability rating, there are concerns on its financial health. DXC is cheap, but on the other hand it scores bad on growth.
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.
In the past 5 years DXC always reported a positive cash flow from operatings.
1.2 Ratios
DXC has a Return On Assets (2.95%) which is in line with its industry peers.
DXC's Return On Equity of 12.05% is fine compared to the rest of the industry. DXC outperforms 70.73% of its industry peers.
DXC has a Return On Invested Capital (3.17%) which is comparable to the rest of the industry.
Measured over the past 3 years, the Average Return On Invested Capital for DXC is significantly below the industry average of 21.60%.
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
DXC has a Profit Margin of 3.02%. This is comparable to the rest of the industry: DXC outperforms 53.66% of its industry peers.
In the last couple of years the Profit Margin of DXC has declined.
DXC has a Operating Margin of 3.81%. This is comparable to the rest of the industry: DXC outperforms 50.00% of its industry peers.
In the last couple of years the Operating Margin of DXC has declined.
DXC has a worse Gross Margin (24.09%) 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.
Compared to 1 year ago, DXC has more shares outstanding
The number of shares outstanding for DXC has been reduced compared to 5 years ago.
DXC has a better debt/assets ratio than last year.
2.2 Solvency
DXC has an Altman-Z score of 0.97. This is a bad value and indicates that DXC is not financially healthy and even has some risk of bankruptcy.
With a Altman-Z score value of 0.97, DXC is not doing good in the industry: 71.95% of the companies in the same industry are doing better.
The Debt to FCF ratio of DXC is 5.64, which is a neutral value as it means it would take DXC, 5.64 years of fcf income to pay off all of its debts.
With a Debt to FCF ratio value of 5.64, DXC perfoms like the industry average, outperforming 51.22% of the companies in the same industry.
DXC has a Debt/Equity ratio of 1.15. This is a high value indicating a heavy dependency on external financing.
Looking at the Debt to Equity ratio, with a value of 1.15, DXC is doing worse than 71.95% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.15 | ||
| Debt/FCF | 5.64 | ||
| Altman-Z | 0.97 |
ROIC/WACC0.4
WACC7.9%
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 worse Current ratio (1.22) than 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
The Earnings Per Share has grown by an nice 8.20% over the past year.
The Earnings Per Share has been decreasing by -9.24% on average over the past years.
Looking at the last year, DXC shows a decrease in Revenue. The Revenue has decreased by -5.82% in the last year.
Measured over the past years, DXC shows a decrease in Revenue. The Revenue has been decreasing by -8.05% on average per year.
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
DXC is expected to show a decrease in Earnings Per Share. In the coming years, the EPS will decrease by -3.62% yearly.
Based on estimates for the next years, DXC will show a decrease in Revenue. The Revenue will decrease by -3.65% on average per year.
EPS Next Y-11.63%
EPS Next 2Y-4.11%
EPS Next 3Y-3.62%
EPS Next 5YN/A
Revenue Next Year-4.31%
Revenue Next 2Y-3.71%
Revenue Next 3Y-3.65%
Revenue Next 5YN/A
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
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
Based on the Price/Earnings ratio of 4.17, the valuation of DXC can be described as very cheap.
Based on the Price/Earnings ratio, DXC is valued cheaply inside the industry as 97.56% of the companies are valued more expensively.
DXC is valuated cheaply when we compare the Price/Earnings ratio to 27.41, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 4.72, the valuation of DXC can be described as very cheap.
DXC's Price/Forward Earnings ratio is rather cheap when compared to the industry. DXC is cheaper than 95.12% of the companies in the same industry.
DXC is valuated cheaply when we compare the Price/Forward Earnings ratio to 35.19, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 4.17 | ||
| Fwd PE | 4.72 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, DXC is valued cheaper than 97.56% of the companies in the same industry.
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 | 3.78 | ||
| EV/EBITDA | 2.21 |
4.3 Compensation for Growth
A cheap valuation may be justified as DXC's earnings are expected to decrease with -3.62% in the coming years.
PEG (NY)N/A
PEG (5Y)N/A
EPS Next 2Y-4.11%
EPS Next 3Y-3.62%
5. Dividend
5.1 Amount
DXC does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
14.3
-0.81 (-5.36%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners91.96%
Inst Owner Change0%
Ins Owners0.88%
Ins Owner Change13.95%
Market Cap2.60B
Analysts50
Price Target18.19 (27.2%)
Short Float %4.15%
Short Ratio4.32
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)-0.64%
PT rev (3m)-20.73%
EPS NQ rev (1m)0.02%
EPS NQ rev (3m)-20.12%
EPS NY rev (1m)-1.16%
EPS NY rev (3m)-12.2%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-0.96%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-0.51%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 4.17 | ||
| Fwd PE | 4.72 | ||
| P/S | 0.2 | ||
| P/FCF | 3.78 | ||
| P/OCF | 1.86 | ||
| P/B | 0.81 | ||
| P/tB | 2.45 | ||
| EV/EBITDA | 2.21 |
EPS(TTM)3.43
EY23.99%
EPS(NY)3.03
Fwd EY21.2%
FCF(TTM)3.78
FCFY26.42%
OCF(TTM)7.69
OCFY53.77%
SpS70.79
BVpS17.76
TBVpS5.84
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 | 0.97 |
F-Score8
WACC7.9%
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-11.63%
EPS Next 2Y-4.11%
EPS Next 3Y-3.62%
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-4.31%
Revenue Next 2Y-3.71%
Revenue Next 3Y-3.65%
Revenue Next 5YN/A
EBIT growth 1Y-11.37%
EBIT growth 3Y0.55%
EBIT growth 5Y-21.62%
EBIT Next Year77.76%
EBIT Next 3Y19.27%
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%