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 81 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 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.
In multiple years DXC reported negative net income over the last 5 years.
Each year in the past 5 years DXC had a positive operating cash flow.
1.2 Ratios
DXC has a Return On Assets (2.95%) which is in line with its industry peers.
DXC has a Return On Equity of 12.05%. This is in the better half of the industry: DXC outperforms 70.37% of its industry peers.
DXC has a Return On Invested Capital of 3.17%. This is comparable to the rest of the industry: DXC outperforms 53.09% of its industry peers.
DXC had an Average Return On Invested Capital over the past 3 years of 2.61%. This is significantly below the industry average of 21.85%.
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 53.09% of the companies in the same industry.
In the last couple of years the Profit Margin of DXC has declined.
The Operating Margin of DXC (3.81%) is comparable to the rest of the industry.
In the last couple of years the Operating Margin of DXC has declined.
DXC's Gross Margin of 24.09% is on the low side compared to the rest of the industry. DXC is outperformed by 71.60% of its industry peers.
In the last couple of years the Gross Margin of DXC has remained more or less at the same level.
| 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
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), DXC is destroying value.
DXC has more shares outstanding than it did 1 year ago.
Compared to 5 years ago, DXC has less shares outstanding
Compared to 1 year ago, DXC has an improved debt to assets ratio.
2.2 Solvency
Based on the Altman-Z score of 1.00, we must say that DXC is in the distress zone and has some risk of bankruptcy.
DXC's Altman-Z score of 1.00 is on the low side compared to the rest of the industry. DXC is outperformed by 71.60% of its industry peers.
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.
DXC's Debt to FCF ratio of 5.64 is in line compared to the rest of the industry. DXC outperforms 51.85% of its industry peers.
DXC has a Debt/Equity ratio of 1.15. This is a high value indicating a heavy dependency on external financing.
DXC's Debt to Equity ratio of 1.15 is on the low side compared to the rest of the industry. DXC is outperformed by 70.37% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.15 | ||
| Debt/FCF | 5.64 | ||
| Altman-Z | 1 |
ROIC/WACC0.39
WACC8.21%
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 67.90% of its industry peers.
DXC has a Quick Ratio of 1.22. This is a normal value and indicates that DXC is financially healthy and should not expect problems in meeting its short term obligations.
The Quick ratio of DXC (1.22) is worse than 66.67% 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.
DXC shows a decrease in Revenue. In the last year, the revenue decreased by -5.82%.
DXC shows a decrease in Revenue. Measured over the last years, the Revenue has been decreasing by -8.05% yearly.
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
The Earnings Per Share is expected to decrease by -3.52% on average over the next years.
DXC is expected to show a decrease in Revenue. In the coming years, the Revenue will decrease by -4.03% yearly.
EPS Next Y-11.54%
EPS Next 2Y-3.89%
EPS Next 3Y-3.52%
EPS Next 5YN/A
Revenue Next Year-4.31%
Revenue Next 2Y-3.66%
Revenue Next 3Y-4.03%
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.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
DXC is valuated cheaply with a Price/Earnings ratio of 4.73.
97.53% of the companies in the same industry are more expensive than DXC, based on the Price/Earnings ratio.
The average S&P500 Price/Earnings ratio is at 27.45. DXC is valued rather cheaply when compared to this.
DXC is valuated cheaply with a Price/Forward Earnings ratio of 5.35.
Based on the Price/Forward Earnings ratio, DXC is valued cheaper than 95.06% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of DXC to the average of the S&P500 Index (21.90), we can say DXC is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 4.73 | ||
| Fwd PE | 5.35 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, DXC is valued cheaply inside the industry as 97.53% of the companies are valued more expensively.
98.77% 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 | 4.29 | ||
| EV/EBITDA | 2.4 |
4.3 Compensation for Growth
A cheap valuation may be justified as DXC's earnings are expected to decrease with -3.52% in the coming years.
PEG (NY)N/A
PEG (5Y)N/A
EPS Next 2Y-3.89%
EPS Next 3Y-3.52%
5. Dividend
5.1 Amount
DXC does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
16.24
+0.28 (+1.75%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners91.96%
Inst Owner Change-2.91%
Ins Owners0.88%
Ins Owner Change13.95%
Market Cap2.94B
Analysts50
Price Target18.19 (12.01%)
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)-15.26%
PT rev (3m)-20.73%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-20.13%
EPS NY rev (1m)-1.07%
EPS NY rev (3m)-12.12%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-0.96%
Revenue NY rev (1m)-0.89%
Revenue NY rev (3m)-0.51%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 4.73 | ||
| Fwd PE | 5.35 | ||
| P/S | 0.23 | ||
| P/FCF | 4.29 | ||
| P/OCF | 2.11 | ||
| P/B | 0.91 | ||
| P/tB | 2.77 | ||
| EV/EBITDA | 2.4 |
EPS(TTM)3.43
EY21.12%
EPS(NY)3.03
Fwd EY18.68%
FCF(TTM)3.79
FCFY23.34%
OCF(TTM)7.71
OCFY47.49%
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 | 1 |
F-Score8
WACC8.21%
ROIC/WACC0.39
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-11.54%
EPS Next 2Y-3.89%
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-4.31%
Revenue Next 2Y-3.66%
Revenue Next 3Y-4.03%
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%