What’s in Store for DXC Technology (DXC) This Earnings Season?

DXC Technology Company DXC is scheduled to release third-quarter fiscal 2021 results on Feb 4.

The Zacks Consensus Estimate for quarterly revenues is pinned at $4.22 billion, calling for a 16% year-over-year decline. The consensus mark for earnings is 54 cents per share, suggesting a 56.8% slump.

The company’s earnings outpaced estimates in all of the trailing four quarters, the average beat being 49.7%.

DXC Technology Company. Price and Consensus

DXC Technology Company. Price and Consensus
DXC Technology Company. Price and Consensus

DXC Technology Company. price-consensus-chart | DXC Technology Company. Quote

Let’s see how things have shaped up prior to the upcoming announcement.

Factors at Play

DXC’s top line is likely to reflect negative impact of price concessions, previous business terminations, and runoffs during the fiscal third quarter. However, during the fiscal second-quarter earnings call, management had hinted that these headwinds would have lesser impact on its fiscal third-quarter results.

Furthermore, DXC’s fiscal third-quarter performance is likely to have been affected by the pandemic-induced business disruptions. Soft IT spending as organizations are pushing back their investments in big and expensive technology products, due to the global economic slowdown concerns amid the coronavirus crisis, might have hurt the company’s performance during the quarter to be reported.

Moreover, a weak traditional business is expected to have dampened the top line during the quarter under review.

Furthermore, increased investments in the business and higher interest expenses might have weighed on the company’s bottom-line performance.

What Our Model Says

Our proven model predicts an earnings beat for DXC this season. The combination of a positive Earnings ESP, and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

DXC currently carries a Zacks Rank of 3 and has an Earnings ESP of +1.23%.

Other Stocks With Favorable Combinations

Here are some other companies, which, per our model, have the right combination of elements to post an earnings beat in their upcoming releases:

CDW Corporation CDW has an Earnings ESP of +6.74% and currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Applied Materials, Inc. AMAT has an Earnings ESP of +2.54% and holds a Zacks Rank of 3 currently.

Equifax, Inc. EFX has an Earnings ESP of +1.44% and carries a Zacks Rank #3, at present.

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