Anticipated Performance
DXC Technology (DXC) is set to unveil its fourth-quarter fiscal 2024 earnings on May 16 with the company projecting revenues between $3.35 billion and $3.39 billion. Analysts predict a year-over-year drop of 6.1% with the Zacks Consensus Estimate at $3.37 billion.
The anticipated non-GAAP earnings stand between 80 cents and 85 cents per share, showing an 18.6% decline compared to the previous year.
Market Dynamics
DXC’s fourth-quarter results may be adversely affected by a slowdown in IT spending due to global economic uncertainties. The traditional business segment is expected to struggle, but gradual revenue stabilization could provide some relief.
However, the company’s digital business strength and strategic partnerships in the cloud computing sector might mitigate the impact of these challenges.
Financial Outlook
DXC foresees a decline in organic revenues by 5.5-6.5% for the fourth quarter, largely driven by weak performance in Global Infrastructure Services (GIS) and Global Business Services (GBS) segments.
The GIS segment might bear the brunt of Modern Workplace challenges, contributing to the overall revenue shortfall and impacting margins. DXC projects an adjusted EBIT margin of 7%-7.5% for the quarter.
Cost-saving efforts and reduced interest expenses could offer some cushion against revenue declines. The company’s aggressive share repurchase program may boost the earnings per share, offsetting the negative impact on the bottom line.
Earnings Prediction
The analysis model does not decisively predict a positive outcome for DXC this quarter. Although a combination of Earnings ESP and specific Zacks Ranks could suggest an earnings beat, the current scenario does not align with these parameters with DXC currently bearing a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%.
Promising Stocks
According to the model, NVIDIA, Zscaler, and Agilent Technologies display favorable potential for an earnings beat in their upcoming releases. NVIDIA’s consistent performance, Zscaler’s growth trajectory, and Agilent’s track record of surpassing estimates in the past are notable indicators.
Investors eagerly anticipate NVIDIA’s first-quarter fiscal 2025 results on May 22, reflecting significant year-over-year improvement. Zscaler and Agilent Technologies are also expected to post positive results in the foreseeable future.
