DXC Technology DXC is scheduled to report third-quarter fiscal 2025 results on Feb. 4, after market close.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

For the fiscal third quarter, DXC Technology anticipates revenues between $3.2 billion and $3.3 billion. The Zacks Consensus Estimate for fiscal third-quarter revenues is pegged at $3.25 billion, indicating a year-over-year decline of 4.3%.

DXC projects adjusted earnings per share between 75 cents and 80 cents for the fiscal third quarter. The consensus mark for earnings is pegged at 77 cents per share, suggesting an 11.5% year-over-year decrease.

DXC Technology’s earnings surpassed estimates in each of the trailing four quarters, with an average surprise of 22.2%.

DXC Technology Company. Price and EPS Surprise

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

Factors to Consider for DXC Technology

Robust recurring revenues from its large global insurance carrier customers and a strong customer retention rate are likely to have contributed to DXC's fiscal third-quarter performance. The company's performance in the fiscal third quarter is likely to have been aided by its growing global reach as well as its extensive local presence to meet specific market needs.

Given that artificial intelligence (AI) is at the core of the trend toward digital transformation, DXC's expanding AI capabilities are expected to have helped the company's fiscal third-quarter performance. Sales in the fiscal third quarter are likely to have increased as a result of DXC Technology's collaborations with well-known financial services clients, such as Equitable Holdings, to facilitate quicker work delivery.

Focusing on the unexplored cyberspace, cloud computing and big data industries is probably what allowed DXC Technology to take advantage of this unexplored opportunity. Government clients provide DXC with the majority of its cyber business revenues. Most likely, it maintained a comparatively stable top line. For its Global Business Services (GBS) division, DXC Technology still anticipates strong top-line growth.

However, the disadvantages of the softening of IT spending are likely to have been greater than the benefits of the aforementioned factors, as companies are postponing investments in large, expensive technology products because of persistent macroeconomic and geopolitical issues.

The company anticipates a decline in organic revenues between 5.5% and 4.5% in the fiscal third quarter. The primary causes of the anticipated year-over-year decline in organic revenues are the low backlog that currently exists and the fewer new contracts being signed, which results in lower value. Furthermore, DXC Technology anticipates a slight decline in its GBS revenues. The quarterly margins probably suffered as a result of the revenue shortfall. The firm expects the adjusted EBIT margin to be lower in the second half of the year than it was in the first.

What Our Proven Model Says for DXC’s Q3 Earnings

According to the Zacks model, the combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

DXC has an Earnings ESP of -1.66% and carries a Zacks Rank #3 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some stocks worth considering, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.

BILL Holdings, Inc. BILL has an Earnings ESP of +29.71% and flaunts a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

It is set to report second-quarter fiscal 2025 results on Feb. 6. The Zacks Consensus Estimate for BILL’s second-quarter fiscal 2025 earnings are pegged at 48 cents per share, up by a penny over the past 60 days, indicating a fall of 23.8% from the year-ago quarter’s reported figure. BILL shares have gained 22.1% over the past year.

Lumentum Holdings Inc. LITE has an Earnings ESP of +17.01% and carries a Zacks Rank #2 at present. 

It is set to report second-quarter fiscal 2025 results on Feb. 6. The Zacks Consensus Estimate for LITE’s second-quarter fiscal 2025 earnings per share is pegged at 37 cents, up by a penny over the past 60 days. LITE shares have risen 41.8% over the past year.

DoorDash DASH has an Earnings ESP of +35.67% and carries a Zacks Rank #2 at present. 

It is set to report fourth-quarter 2024 results on Feb. 11. The Zacks Consensus Estimate for DASH’s fourth-quarter earnings is pegged at 35 cents per share, up by a penny over the past 60 days, indicating a rise of 189.7% from the year-ago quarter’s reported figure. DASH shares have surged 78.3% over the past year.

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