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What's in the Offing for DXC Technology's (DXC) Q2 Earnings?

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DXC Technology Company’s (DXC - Free Report) second-quarter fiscal 2022 results are scheduled to be out on Nov 3.

For the fiscal second quarter, the company anticipates revenues between $4.08 billion and $4.13 billion. The Zacks Consensus Estimate for quarterly revenues is pinned at $4.12 billion, calling for a 9.5% year-over-year decline.

Moreover, DXC expects non-GAAP earnings to come in at 80-84 cents per share. The consensus mark for earnings is pegged at 84 cents per share, suggesting a 31.3% year-over-year jump.

The company’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 35.4%.

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

DXC Technology Company. Price and EPS Surprise DXC Technology Company. Price and EPS Surprise

DXC Technology Company. price-eps-surprise | DXC Technology Company. Quote

Key Factors

DXC’s fiscal second-quarter performance is likely to have benefited from strength in the digital business and partnerships that are helping it expand in the cloud computing space. Also, increasing IT spending is anticipated to have aided the top-line performance during the quarter under review.

DXC’s top line will, however, likely reflect the negative impact of price concessions, previous business terminations, and runoffs during the fiscal second quarter. Apart from this, a weak traditional business might have dampened the top line during the quarter under review. However, sequential revenue stabilization is expected to have continued.

Margins are anticipated to have witnessed expansion during the period in discussion, mainly driven by the company’s cost-saving initiatives and lower interest expenses.

Also, a book-to-bill higher than 1.0 is likely to have been a positive during the fiscal second quarter.

The company’s focus on reducing debt via divestments is estimated to have resulted in a sequentially stronger balance sheet.

What Our Model Says

Our proven model does not predict an earnings beat for DXC this season. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. But that’s not the case here. 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 2 and has an Earnings ESP of 0.00%.

Stocks With Favorable Combinations

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

HP (HPQ - Free Report) has an Earnings ESP of +1.89% and currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Applied Materials (AMAT - Free Report) has an Earnings ESP of +0.52% and holds a Zacks Rank of 2, currently.

Paycom Software (PAYC - Free Report) has an Earnings ESP of +3.30% and carries a Zacks Rank #3, at present.