DXC Technology, Inc. DXC posted fourth-quarter fiscal 2026 non-GAAP earnings of 77 cents per share, which declined 8.3% year over year but beat the Zacks Consensus Estimates by 4.76%.
DXC’s revenues of $3.13 billion slipped 1.2% from the year-ago quarter and missed the consensus mark by 1.34%.
Despite the top-line shortfall, profitability held up, with adjusted EBIT margin at 7.6% for the quarter. Management pointed to disciplined spending and execution on margin and cash flow, even as demand softened in parts of the portfolio.
DXC Flags Execution Gaps as Organic Revenues Slide
DXC Technology’s total revenues declined 6.6% on an organic basis in the quarter, underscoring that foreign exchange and portfolio effects were not the main issue. On the earnings call, DXC described the revenue gap as tied to both pipeline and execution.
Pressure was most visible in short-term services work. The company said discretionary spending weakened further during the period, particularly within Global Infrastructure Services, with impacts in both the United States and Europe.
DXC Technology Sees Mixed Segment Trends in Q4
By segment, Consulting & Engineering Services (CES) generated $1,256 million of revenues, down 3.9% on an organic basis.
DXC Technology Company. Price, Consensus and EPS Surprise
DXC Technology Company. price-consensus-eps-surprise-chart | DXC Technology Company. Quote
Global Infrastructure Services (GIS) produced $1,549 million, down 10.6% organically and below management’s expectations for the quarter.
Insurance Software & Services delivered $325 million, up 4.0% organically, supported by software strength.
Bookings trends also diverged. DXC’s bookings were $3.3 billion, and the quarterly book-to-bill ratio was 1.07x, with bookings down 13.5% year over year.
CES and GIS bookings declined 11.1% and 18.9%, respectively, while Insurance bookings increased 20.3%, though with a book-to-bill ratio of 0.88x.
DXC Balance Sheet and Cash Flow
DXC Technology exited the fiscal fourth quarter with $1.74 billion in cash and cash equivalents compared with $1.73 billion in the previous quarter. The long-term debt balance (net of current maturities) was $3.03 billion as of March 31, 2026.
DXC generated $239 million in cash from operations during the quarter. Free cash flow was $110 million, essentially flat year over year, as cash flow strength was supported by lower cash taxes and lower capital expenditures across fiscal 2026.
Capital allocation remained active. DXC repurchased $60 million of shares in the quarter and $250 million in fiscal 2026. The company also emphasized balance sheet actions since the start of fiscal 2025, including $808 million of debt repayments across fiscal 2025 and 2026 and the prepayment of $300 million of bonds due September 2026.
DXC’s Guidance for FY27
For the first quarter of fiscal 2027, DXC expects revenues to be in the range of $2.97-$3.00 billion, indicating an organic decline of 7.5% to 6.5% year over year. The Zacks Consensus Estimate for the top line is pegged at $3.08 billion, indicating a decline of 2.5%.
The company guided to an adjusted EBIT margin of approximately 5%.
For the first quarter of fiscal 2027, DXC expects non-GAAP diluted earnings of approximately 40 cents per share. The Zacks Consensus Estimate for the earnings is pegged at 67 cents, indicating a decline of 1.5%.
For fiscal 2027, DXC projects revenues to be in the band of $12.11-$12.35 billion, implying an organic decline of 5.0% to 3.0%. The Zacks Consensus Estimate for the top line is pegged at $12.42 billion, indicating a decline of 2.1%.
It expects an adjusted EBIT margin of 6.0% to 7.0%
For fiscal 2027, DXC expects non-GAAP diluted earnings of $2.40-$2.90 per share. The Zacks Consensus Estimate for earnings is pegged at $3.31, indicating growth of 3.5% year over year.
Zacks Rank and Other Stocks to Consider
Currently, DXC carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader Zacks Computer and Technology sector are Broadcom AVGO, Celestica CLS and Samsara IOT, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Broadcom have gained 21.7% year to date. The Zacks Consensus Estimate for Broadcom’s 2026 earnings is pegged at $11.45 per share, up by a penny over the past 30 days, indicating an increase of 68% year over year.
Shares of Celestica have rallied 41.7% year to date. The Zacks Consensus Estimate for Celestica’s 2026 earnings is pegged at $9.85 per share, up $1.01 over the past seven days, indicating an increase of 62.8% year over year.
Samsara shares have lost 14% year to date. The Zacks Consensus Estimate for IOT’s fiscal 2027 earnings is pegged at 68 cents per share, up 11 cents over the past 60 days, indicating an increase of 21.4% year over year.
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This article originally published on Zacks Investment Research (zacks.com).