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DXC Technology (DXC - Free Report) delivered better-than-anticipated results for second-quarter fiscal 2021. The company reported non-GAAP earnings of 64 cents per share, which beat the Zacks Consensus Estimate by 68.4%. The figure, however, declined from the prior-year quarter’s $1.38.
Revenues of $4.55 billion surpassed the consensus mark of $4.49 billion. However, quarterly revenues fell 6.1% year over year. Termination of certain customer accounts and price concessions mainly affected the top line.
Quarter in Detail
Segment wise, revenues from Global Business Services (“GBS”) edged down 1.9% on a year-over-year basis to $2.24 billion, reflecting negative impact of price declines and termination of certain customer accounts. Also, the resolution of customer disputes took a toll on the segment’s top line.
DXC Technology Company. Price, Consensus and EPS Surprise
During the reported quarter, the company won $2.4 billion worth of new business awards for the GBS segment.
Global Infrastructure Services (“GIS”) revenues during the fiscal second quarter came in at $2.31 billion, down 9.9% year over year, reflecting the termination of certain customer accounts and price downs.
During the fiscal second quarter, the company won $2.5 billion worth of new business awards for the GIS segment.
Within the company’s enterprise technology stack business, ITO layer revenues declined 14% year over year on account terminations, price concessions and customer settlements. Cloud and security revenues fell 3.4% year over year.
Application layer revenues decreased 9.4%.
Adjusted EBIT margin was 6.2%, contracting 470 basis points year over year. Non-GAAP income from continuing operations was $212 million compared with the year-earlier quarter’s $492 million.
Balance Sheet and Other Financial Metrics
The company exited the fiscal second quarter with $3.08 billion in cash and cash equivalents compared with the $5.51 billion witnessed in the previous quarter. Long-term debt balance (net of current maturities) decreased to $8.05 billion as of Sep 30 from $10.33 billion as of Jun 30.
During the reported quarter, the company generated operating and adjusted free cash flows of $472 million and $237 million, respectively. In the first six months of fiscal 2021, the company generated operating and adjusted free cash flows of $591 million and $209 million, respectively.
Outlook
For the fiscal third quarter, the company anticipates revenues between $4.15 billion and $4.20 billion. Adjusted operating margin is expected in the range of 6% to 6.5%. DXC projects adjusted EPS in the band of 50-55 cents.
Zacks Rank & Stocks to Consider
DXC currently carries a Zacks Rank #5 (Strong Sell).
The long-term earnings growth rate for NVIDIA, Paylocity and Covetrus is currently pegged at 20.1%, 20%, and 31.6%, respectively.
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Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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DXC Technology (DXC) Tops Q2 Earnings & Revenue Estimates
DXC Technology (DXC - Free Report) delivered better-than-anticipated results for second-quarter fiscal 2021. The company reported non-GAAP earnings of 64 cents per share, which beat the Zacks Consensus Estimate by 68.4%. The figure, however, declined from the prior-year quarter’s $1.38.
Revenues of $4.55 billion surpassed the consensus mark of $4.49 billion. However, quarterly revenues fell 6.1% year over year. Termination of certain customer accounts and price concessions mainly affected the top line.
Quarter in Detail
Segment wise, revenues from Global Business Services (“GBS”) edged down 1.9% on a year-over-year basis to $2.24 billion, reflecting negative impact of price declines and termination of certain customer accounts. Also, the resolution of customer disputes took a toll on the segment’s top line.
DXC Technology Company. Price, Consensus and EPS Surprise
DXC Technology Company. price-consensus-eps-surprise-chart | DXC Technology Company. Quote
During the reported quarter, the company won $2.4 billion worth of new business awards for the GBS segment.
Global Infrastructure Services (“GIS”) revenues during the fiscal second quarter came in at $2.31 billion, down 9.9% year over year, reflecting the termination of certain customer accounts and price downs.
During the fiscal second quarter, the company won $2.5 billion worth of new business awards for the GIS segment.
Within the company’s enterprise technology stack business, ITO layer revenues declined 14% year over year on account terminations, price concessions and customer settlements. Cloud and security revenues fell 3.4% year over year.
Application layer revenues decreased 9.4%.
Adjusted EBIT margin was 6.2%, contracting 470 basis points year over year. Non-GAAP income from continuing operations was $212 million compared with the year-earlier quarter’s $492 million.
Balance Sheet and Other Financial Metrics
The company exited the fiscal second quarter with $3.08 billion in cash and cash equivalents compared with the $5.51 billion witnessed in the previous quarter. Long-term debt balance (net of current maturities) decreased to $8.05 billion as of Sep 30 from $10.33 billion as of Jun 30.
During the reported quarter, the company generated operating and adjusted free cash flows of $472 million and $237 million, respectively. In the first six months of fiscal 2021, the company generated operating and adjusted free cash flows of $591 million and $209 million, respectively.
Outlook
For the fiscal third quarter, the company anticipates revenues between $4.15 billion and $4.20 billion. Adjusted operating margin is expected in the range of 6% to 6.5%. DXC projects adjusted EPS in the band of 50-55 cents.
Zacks Rank & Stocks to Consider
DXC currently carries a Zacks Rank #5 (Strong Sell).
Better-ranked stocks in the broader technology sector include NVIDIA Corporation (NVDA - Free Report) , Paylocity Holding Corporation (PCTY - Free Report) and Covetrus, Inc. , all carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term earnings growth rate for NVIDIA, Paylocity and Covetrus is currently pegged at 20.1%, 20%, and 31.6%, respectively.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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