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After DXC Technology Company’s (NYSE:DXC) earnings announcement on 31 March 2019, analyst consensus outlook appear cautiously subdued, as a 19% rise in profits is expected in the upcoming year, against the higher past 5-year average growth rate of 47%. With trailing-twelve-month net income at current levels of US$1.2b, we should see this rise to US$1.5b in 2020. Below is a brief commentary around DXC Technology’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
How will DXC Technology perform in the near future?
The longer term view from the 16 analysts covering DXC is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To get an idea of the overall earnings growth trend for DXC, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
From the current net income level of US$1.2b and the final forecast of US$2.3b by 2022, the annual rate of growth for DXC’s earnings is 20%. EPS reaches $8.99 in the final year of forecast compared to the current $4.4 EPS today. With a current profit margin of 5.9%, this movement will result in a margin of 10% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For DXC Technology, I’ve compiled three essential aspects you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is DXC Technology worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether DXC Technology is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of DXC Technology? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.