DXC Technology DXC is slated to report fourth-quarter fiscal 2023 results on May 18.
For the fourth quarter of fiscal 2023, the company anticipates revenues between $3.615 billion and $3.635 billion. The Zacks Consensus Estimate for fiscal fourth-quarter revenues stands at $3.62 billion, indicating a year-over-year decline of 9.6%.
DXC anticipates non-GAAP earnings between $1.00 and $1.05 per share. The consensus mark for earnings is pegged at $1.02 per share, suggesting a 21.4% year-over-year increase.
The company’s earnings outpaced estimates twice in the trailing four quarters while missing the same in the remaining two, with a negative 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 fiscal fourth-quarter performance is likely to have been negatively impacted by the business operation closure in Russia following the Kremlin force’s invasion of Ukraine. On its fourth-quarter fiscal 2022 earnings conference call, the company stated that the exit from Russia would reduce its total revenues by approximately $140 million in fiscal 2023.
The strong U.S. dollar against major currencies and the concluded divestments of certain business units in the past 12 months are also anticipated to have negatively impacted the fiscal fourth-quarter top line. The company projected unfavorable foreign currency exchange rates would have a negative impact of 3.6% on its fourth-quarter fiscal 2023 revenue growth. Moreover, it projects that acquisitions and divestitures concluded in the past 12 months will have a negative impact of 3.1% on fourth-quarter sales.
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. A modest increase in IT spending is anticipated to have contributed to the top line in the quarter to be reported.
Moreover, margins are forecast to have benefited from the company’s cost-saving initiatives and reduction in debts, which are likely to have lowered its interest expenses during the quarter. DXC projects the adjusted EBIT margin in the range of 8.7%-9.2% in the fiscal fourth quarter.
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 0.00%. 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, Agilent A, Cisco Systems CSCO and HP Inc. HPQ have the right combination of elements to post an earnings beat in their upcoming releases.
Agilent carries a Zacks Rank #2 and has an Earnings ESP of +0.40%. The company is scheduled to report second-quarter fiscal 2023 results on May 23. Its earnings beat the Zacks Consensus Estimate in the preceding four quarters, with the average surprise being 7%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Agilent’s second-quarter earnings stands at $1.27 per share, implying a year-over-year increase of 12.4%. It is estimated to report revenues of $1.67 billion, which suggests an increase of approximately 3.8% from the year-ago quarter.
Cisco carries a Zacks Rank #3 and has an Earnings ESP of +1.59%. The company is slated to report third-quarter fiscal 2023 results on May 17. Its earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 1.8%.
The Zacks Consensus Estimate for CSCO’s third-quarter earnings is pegged at 97 cents per share, indicating a year-over-year increase of 11.5%. The consensus mark for revenues stands at $14.39 billion, suggesting a year-over-year increase of 12.1%.
HP is set to report second-quarter fiscal 2023 results on May 30. The company has a Zacks Rank #3 and an Earnings ESP of +2.24% at present. HP’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 1.1%.
The Zacks Consensus Estimate for HPQ’s second-quarter earnings is pegged at 76 cents per share, suggesting a decline of 29.6% from the year-ago quarter’s earnings of $1.11. HP’s quarterly revenues are estimated to decrease 19.9% year over year to $13.21 billion.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report