Results: DXC Technology Company Beat Earnings Expectations And Analysts Now Have New Forecasts

Investors in DXC Technology Company (NYSE:DXC) had a good week, as its shares rose 2.6% to close at US$22.11 following the release of its third-quarter results. Revenues were US$3.2b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.31, an impressive 118% ahead of estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for DXC Technology

Taking into account the latest results, the current consensus, from the eleven analysts covering DXC Technology, is for revenues of US$12.4b in 2026. This implies a small 5.5% reduction in DXC Technology's revenue over the past 12 months. DXC Technology is also expected to turn profitable, with statutory earnings of US$1.31 per share. Before this earnings report, the analysts had been forecasting revenues of US$12.7b and earnings per share (EPS) of US$1.19 in 2026. Although the analysts have lowered their revenue forecasts, they've also made a nice gain to their earnings per share estimates, which implies there's been something of an uptick in sentiment following the latest results.

The average price target increased 5.5% to US$23.56, with the analysts signalling that the improved earnings outlook is more important to the company's valuation than its revenue. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on DXC Technology, with the most bullish analyst valuing it at US$27.00 and the most bearish at US$22.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting DXC Technology is an easy business to forecast or the the analysts are all using similar assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would also point out that the forecast 4.4% annualised revenue decline to the end of 2026 is better than the historical trend, which saw revenues shrink 9.0% annually over the past five years Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 9.5% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect DXC Technology to suffer worse than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around DXC Technology's earnings potential next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Even so, earnings are more important to the intrinsic value of the business. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple DXC Technology analysts - going out to 2027, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for DXC Technology that you need to be mindful of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.