DXC Technology Company (DXC - Free Report) recently announced the pricing of GBP 250 million aggregate principal amount of its 2.750% Senior Notes which are due 2025. The notes are being issued at a discount and are priced at 99.528% of the aggregate principal amount.
The offering is anticipated to close on or about March 15. Led by Lloyds Bank plc and Merrill Lynch International, a group of underwriters will be conducting the offering.
DXC is looking to use the proceeds from the offerings post the payment of all related expenses for repaying a part of its GBP 287 million aggregate principal amount of outstanding loans under revolving credit facility. The company may also use the fund for general corporate purposes and working capital.
Though the Fed has been raising interest rates for the past year, borrowing costs are still very low, enabling companies to obtain easy financing. Furthermore, we believe the company has been offering senior notes at the right time as the Fed is likely to raise interest rates much faster than previously anticipated.
Nonetheless, escalating interest expenses due to increased debt burden may dampen the company’s profitability. Notably, the company exited the third-quarter of fiscal 2018 with $2.926 billion in cash and cash equivalents compared with $2.671 billion in the previous quarter. Long-term debt balance (net of current maturities) was $6.367 billion.
The company’s share price movement has been quite favorable since its formation via the merger between Computer Sciences Corporation and Enterprise Services Division of Hewlett Packard Enterprise (HPE - Free Report) which concluded on Apr 1, 2017. The company’s shares have returned 50.7%, outperforming the industry’s rally of 31.9%.
Currently, DXC carries a Zacks Rank #2 (Buy).
Other top-ranked stocks worth considering the broader technology sector are Paycom Software, Inc. (PAYC - Free Report) and Facebook, Inc. (FB - Free Report) , both sporting a Zacks Rank #1 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term expected EPS growth rate for Paycom and Facebook is projected to be 25.8% and 26.5%, respectively.
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