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For the third quarter of fiscal 2024, the company anticipates revenues between $3.32 billion and $3.37 billion. The Zacks Consensus Estimate for fiscal third-quarter revenues stands at $3.36 billion, indicating a year-over-year decline of 5.8%.
DXC anticipates non-GAAP earnings between 75 cents and 80 cents per share. The consensus mark for earnings is pegged at 77 per share, suggesting a 19% year-over-year decrease.
The company’s earnings outpaced estimates twice in the trailing four quarters while matching on one occasion and missing once, with an average surprise of -1.8%.
Let’s see how things are shaping up for this announcement.
DXC’s third-quarter performance is likely to have been negatively impacted by softening IT spending as organizations are pushing back their investments in big and expensive technology products amid the ongoing macroeconomic and geopolitical issues.
Moreover, a weak traditional business is likely to have weighed on the to-be-reported quarter's performance. However, sequential revenue stabilization is expected to have continued.
The negative impacts of the aforementioned factors are likely to have been partially offset by DXC’s strength in the digital business and partnerships, which have been helping it expand in the cloud computing space.
The company expects third-quarter organic revenues to decline in the 4-5% range, considering the weaker demand environment amid the ongoing challenging macroeconomic situation. Our estimate suggests that DXC’s total organic revenues are likely to have dropped 4.8% in the to-be-reported quarter.
The year-over-year expected organic revenue decline is mainly due to an anticipated weak performance in DXC’s Global Infrastructure Services (“GIS”) as well as the Global Business Services (“GBS”) segment.
The GIS segment’s third-quarter performance is likely to have been negatively impacted by weakness in the IT Outsourcing and Modern Workplace areas, which are parts of this division.
Our estimate for the GIS segment’s third-quarter revenues is pegged at $1.68 billion, indicating a year-over-year decline of 8.7% on an organic basis. Meanwhile, our estimate of $1.67 billion for the GBS segment’s revenues suggests a year-over-year organic decline of 0.7%.
Furthermore, revenue shortfall is likely to have weighed on third-quarter margins. DXC projects the adjusted EBIT margin in the range of 7%-7.5% in the fiscal third quarter.
Additionally, DXC’s cost-saving initiatives and lower interest expenses are likely to have partially offset the negative impact of revenue shortfall on bottom-line results. Apart from the abovementioned factors, a reduction in shares outstanding on the company’s aggressive share repurchase initiative is likely to have boosted the EPS.
What Our Model Says
Our proven model does not conclusively predict 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. However, that’s not the case here.
Though DXC currently carries a Zacks Rank of 3, it has an Earnings ESP of -2.14%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With the Favorable Combination
Per our model, Fabrinet (FN - Free Report) , Apple (AAPL - Free Report) and Meta Platforms (META - Free Report) have the right combination of elements to post an earnings beat in their upcoming releases.
Fabrinet carries a Zacks Rank #2 and has an Earnings ESP of +2.13%. The company is scheduled to report second-quarter fiscal 2024 results on Feb 5. Its earnings beat the Zacks Consensus Estimate in the preceding four quarters, with the average surprise being 3.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Fabrinet’s second-quarter earnings stands at $2.04 per share, indicating a year-over-year improvement of 7.4%. It is estimated to report revenues of $699.8 million, which suggests an increase of approximately 4.7% from the year-ago quarter.
Apple is slated to report first-quarter fiscal 2024 results on Feb 1. The company has a Zacks Rank #3 and an Earnings ESP of +1.96% at present. Apple’s earnings beat the Zacks Consensus Estimate thrice in the trailing four quarters while missing on one occasion, the average surprise being 3.5%.
The Zacks Consensus Estimate for first-quarter earnings is pegged at $2.09 per share, suggesting an increase of 11.2% from the year-ago quarter’s earnings of $1.88. Apple’s quarterly revenues are estimated to improve marginally to $117.62 billion from $117.15 billion in the year-ago quarter.
Meta carries a Zacks Rank #2 and has an Earnings ESP of +0.51%. The company is scheduled to report fourth-quarter 2023 results on Feb 1. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 27.5%.
The Zacks Consensus Estimate for Meta’s fourth-quarter earnings is pegged at $4.84 per share, indicating a year-over-year increase of 61.3%. The consensus mark for revenues stands at $38.93 billion, calling for a year-over-year rise of 21%.
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DXC Technology (DXC) to Report Q3 Earnings: What to Expect?
DXC Technology (DXC - Free Report) is slated to report third-quarter fiscal 2024 results on Feb 1.
For the third quarter of fiscal 2024, the company anticipates revenues between $3.32 billion and $3.37 billion. The Zacks Consensus Estimate for fiscal third-quarter revenues stands at $3.36 billion, indicating a year-over-year decline of 5.8%.
DXC anticipates non-GAAP earnings between 75 cents and 80 cents per share. The consensus mark for earnings is pegged at 77 per share, suggesting a 19% year-over-year decrease.
The company’s earnings outpaced estimates twice in the trailing four quarters while matching on one occasion and missing once, with an average surprise of -1.8%.
Let’s see how things are shaping up for this announcement.
DXC Technology Company. Price and EPS Surprise
DXC Technology Company. price-eps-surprise | DXC Technology Company. Quote
Factors to Consider
DXC’s third-quarter performance is likely to have been negatively impacted by softening IT spending as organizations are pushing back their investments in big and expensive technology products amid the ongoing macroeconomic and geopolitical issues.
Moreover, a weak traditional business is likely to have weighed on the to-be-reported quarter's performance. However, sequential revenue stabilization is expected to have continued.
The negative impacts of the aforementioned factors are likely to have been partially offset by DXC’s strength in the digital business and partnerships, which have been helping it expand in the cloud computing space.
The company expects third-quarter organic revenues to decline in the 4-5% range, considering the weaker demand environment amid the ongoing challenging macroeconomic situation. Our estimate suggests that DXC’s total organic revenues are likely to have dropped 4.8% in the to-be-reported quarter.
The year-over-year expected organic revenue decline is mainly due to an anticipated weak performance in DXC’s Global Infrastructure Services (“GIS”) as well as the Global Business Services (“GBS”) segment.
The GIS segment’s third-quarter performance is likely to have been negatively impacted by weakness in the IT Outsourcing and Modern Workplace areas, which are parts of this division.
Our estimate for the GIS segment’s third-quarter revenues is pegged at $1.68 billion, indicating a year-over-year decline of 8.7% on an organic basis. Meanwhile, our estimate of $1.67 billion for the GBS segment’s revenues suggests a year-over-year organic decline of 0.7%.
Furthermore, revenue shortfall is likely to have weighed on third-quarter margins. DXC projects the adjusted EBIT margin in the range of 7%-7.5% in the fiscal third quarter.
Additionally, DXC’s cost-saving initiatives and lower interest expenses are likely to have partially offset the negative impact of revenue shortfall on bottom-line results. Apart from the abovementioned factors, a reduction in shares outstanding on the company’s aggressive share repurchase initiative is likely to have boosted the EPS.
What Our Model Says
Our proven model does not conclusively predict 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. However, that’s not the case here.
Though DXC currently carries a Zacks Rank of 3, it has an Earnings ESP of -2.14%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With the Favorable Combination
Per our model, Fabrinet (FN - Free Report) , Apple (AAPL - Free Report) and Meta Platforms (META - Free Report) have the right combination of elements to post an earnings beat in their upcoming releases.
Fabrinet carries a Zacks Rank #2 and has an Earnings ESP of +2.13%. The company is scheduled to report second-quarter fiscal 2024 results on Feb 5. Its earnings beat the Zacks Consensus Estimate in the preceding four quarters, with the average surprise being 3.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Fabrinet’s second-quarter earnings stands at $2.04 per share, indicating a year-over-year improvement of 7.4%. It is estimated to report revenues of $699.8 million, which suggests an increase of approximately 4.7% from the year-ago quarter.
Apple is slated to report first-quarter fiscal 2024 results on Feb 1. The company has a Zacks Rank #3 and an Earnings ESP of +1.96% at present. Apple’s earnings beat the Zacks Consensus Estimate thrice in the trailing four quarters while missing on one occasion, the average surprise being 3.5%.
The Zacks Consensus Estimate for first-quarter earnings is pegged at $2.09 per share, suggesting an increase of 11.2% from the year-ago quarter’s earnings of $1.88. Apple’s quarterly revenues are estimated to improve marginally to $117.62 billion from $117.15 billion in the year-ago quarter.
Meta carries a Zacks Rank #2 and has an Earnings ESP of +0.51%. The company is scheduled to report fourth-quarter 2023 results on Feb 1. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 27.5%.
The Zacks Consensus Estimate for Meta’s fourth-quarter earnings is pegged at $4.84 per share, indicating a year-over-year increase of 61.3%. The consensus mark for revenues stands at $38.93 billion, calling for a year-over-year rise of 21%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.