DXC gets a fundamental rating of 3 out of 10. The analysis compared the fundamentals against 88 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.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

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.
In the past 5 years DXC always reported a positive cash flow from operatings.

1.2 Ratios

DXC has a Return On Assets of 2.75%. This is comparable to the rest of the industry: DXC outperforms 56.82% of its industry peers.
DXC has a better Return On Equity (12.15%) than 72.73% of its industry peers.
DXC has a Return On Invested Capital (2.72%) which is in line with its industry peers.
The Average Return On Invested Capital over the past 3 years for DXC is significantly below the industry average of 29.07%.
The last Return On Invested Capital (2.72%) for DXC is above the 3 year average (2.61%), which is a sign of increasing profitability.

		Industry Rank	Sector Rank
ROA	2.75%
ROE	12.15%
ROIC	2.72%

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 (2.93%) which is in line with its industry peers.
In the last couple of years the Profit Margin of DXC has declined.
DXC has a Operating Margin of 3.51%. This is comparable to the rest of the industry: DXC outperforms 51.14% of its industry peers.
In the last couple of years the Operating Margin of DXC has declined.
DXC has a worse Gross Margin (24.59%) than 70.45% of its industry peers.
DXC's Gross Margin has been stable in the last couple of years.

		Industry Rank	Sector Rank
OM	3.51%
PM (TTM)	2.93%
GM	24.59%

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%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so DXC 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 0.90. This is a bad value and indicates that DXC is not financially healthy and even has some risk of bankruptcy.
DXC has a Altman-Z score of 0.90. This is in the lower half of the industry: DXC underperforms 67.05% of its industry peers.
The Debt to FCF ratio of DXC is 4.26, which is a neutral value as it means it would take DXC, 4.26 years of fcf income to pay off all of its debts.
DXC has a Debt to FCF ratio (4.26) which is in line with its industry peers.
A Debt/Equity ratio of 1.25 is on the high side and indicates that DXC has dependencies on debt financing.
The Debt to Equity ratio of DXC (1.25) is worse than 68.18% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	1.25
Debt/FCF	4.26
Altman-Z	0.9

ROIC/WACC0.35

WACC7.88%

2.3 Liquidity

DXC has a Current Ratio of 1.09. This is a normal value and indicates that DXC is financially healthy and should not expect problems in meeting its short term obligations.
With a Current ratio value of 1.09, DXC is not doing good in the industry: 72.73% of the companies in the same industry are doing better.
A Quick Ratio of 1.09 indicates that DXC should not have too much problems paying its short term obligations.
Looking at the Quick ratio, with a value of 1.09, DXC is doing worse than 72.73% of the companies in the same industry.

		Industry Rank	Sector Rank
Current Ratio	1.09
Quick Ratio	1.09

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

The earnings per share for DXC have decreased by -6.74% in the last year.
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%.
The Revenue has been decreasing by -8.05% on average over the past years.

EPS 1Y (TTM)-6.74%

EPS 3Y-0.58%

EPS 5Y-9.24%

EPS Q2Q%4.35%

Revenue 1Y (TTM)-5.82%

Revenue growth 3Y-7.5%

Revenue growth 5Y-8.05%

Sales Q2Q%-0.96%

3.2 Future

The Earnings Per Share is expected to decrease by -0.33% on average over the next years.
DXC is expected to show a decrease in Revenue. In the coming years, the Revenue will decrease by -1.41% yearly.

EPS Next Y-7.87%

EPS Next 2Y-3.86%

EPS Next 3Y-0.33%

EPS Next 5YN/A

Revenue Next Year-1.16%

Revenue Next 2Y-1.84%

Revenue Next 3Y-1.41%

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.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.

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4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 4.35, which indicates a rather cheap valuation of DXC.
95.45% of the companies in the same industry are more expensive than DXC, based on the Price/Earnings ratio.
DXC is valuated cheaply when we compare the Price/Earnings ratio to 28.30, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 4.55, the valuation of DXC can be described as very cheap.
96.59% of the companies in the same industry are more expensive than DXC, based on the Price/Forward Earnings ratio.
The average S&P500 Price/Forward Earnings ratio is at 25.57. DXC is valued rather cheaply when compared to this.

		Industry Rank	Sector Rank
PE	4.35
Fwd PE	4.55

4.2 Price Multiples

DXC's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. DXC is cheaper than 98.86% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, DXC is valued cheaper than 97.73% of the companies in the same industry.