DXC Technology Co (DXC): what the price requires
The current priced-in claim for DXC Technology Co (DXC) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.
Generated: 2026-07-19 · Source: https://boothcheck.com/report/DXC
Headline
| Field | Value |
|---|---|
| Ticker | DXC |
| Company | DXC Technology Co |
| Current price | $9.66/sh |
| Composition | CES (Consulting and Engineering Services) 40% / GIS (Global Infrastructure Services) 50% / Insurance (Insurance Software & Services) 10% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 2.6% |
| Operating margin today | 8.0% |
| Margin compression implied | -5.4pp |
| Multiple paid | 9x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.
Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage (computed at the 7% minimum rate; the CAPM rate 3.2% sits below it).
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.31σ |
| cohort percentile (of 178 peers) | 7 |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by earnings-power and relative-multiple and growth-DCF value, while asset-based lands below the price. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 5.14x | 4 | expensive |
| Earnings | 0.19x | 4 | justifies |
| Relative | 0.05x | 3 | justifies |
| Growth | 0.27x | 3 | justifies |
Families that justify the price: Earnings, Relative, Growth Families that call it expensive: Asset
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 3.7%); the inversion above states its own rate.
Per-Model Detail (n=14)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $158.88 | 0.06x | yes | FCF base $1.0B, growth -2% (input: historical growth), terminal g 0.5%, WACC 3.7%, 5yr projection |
| DCF Exit Multiple | Growth | $35.27 | 0.27x | yes | Exit EV/EBITDA: 4.0x / 1.7x / 3.7x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $93.04 | 0.10x | yes | P/E 52.81x (blended: static sector reference 35x + trailing (TTM) 94x), scenarios: 44.9x / 52.8x / 60.7x (bear / base = reference held flat / bull), EV/EBITDA 15.69x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $1.11 | 8.71x | yes | BV/sh $16.73, ROE (TTM) 0.6%, ke 9.3% |
| Two-Stage Excess Return | Asset | $0.57 | 16.96x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $5.82 | 1.66x | yes | Rev $12.6B, growth -2% (input: historical growth; tapered), Terminal P/S: 0.1x / 0.1x / 0.2x (bear / base = today's held flat / bull, cap 8x) |
| Growth-Adjusted P/E | Relative | — | — | no | — |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $147.70 | 0.07x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $1.31B × (1−21%) / WACC 3.7% → EPV (no growth) |
| Residual Income | Asset | $0.40 | 24.16x | yes | BV $16.73 + 5yr PV of (ROE (TTM) 0.6% − Kₑ 9.3%) × BV; BV grows 0.4%/yr (excluded from median) |
| Graham Number | Asset | $6.14 | 1.57x | yes | √(22.5 × EPS $0.10 × BVPS $16.73) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $193.30 | 0.05x | yes | EBITDA $2.15B × sector EV/EBITDA 25.0x |
| FCF Yield | Earnings | $52.40 | 0.18x | yes | FCF $1036.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $47.11 | 0.21x | yes | SBC-adj FCF $0.95B (FCF $1.04B − SBC $0.09B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $0.08 | 120.81x | yes | EPS $0.10 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median) |
| ROIC-Justified P/B | Asset | $17.19 | 0.56x | yes | BV $16.73 × (ROIC 3.8% / WACC 3.7%) |
| P/Sales Sector | Relative | $193.30 | 0.05x | yes | Revenue $12.64B × sector P/S 8.0x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | $1.08 | 8.95x | yes | EPS $0.10 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $1.1b |
| Net debt / NOPAT (after-tax) | 1.32x |
| Net debt / operating income (pre-tax) | 1.04x |
| Interest coverage | 4.5x |
| Share count CAGR (buyback) | -8.9% |
| Burning cash | no |
Bullet Takeaways
At $8.60 DXC trades below almost every valuation method (the inversion flags it below-floor, under what even a 5% annual operating-profit decline would warrant), so the market is pricing the business for permanent decline.
The cash is real but conditional: fiscal 2026 free cash flow was $713 million (guided to about $600 million for fiscal 2027), funding $250 million of buybacks, with a Q4 book-to-bill of 1.07x as the first sign of stabilization.
The core risk is structural disruption: the legacy Global Infrastructure Services segment is being taken by cloud hyperscalers and offshore rivals, fiscal 2025 revenue fell 5.8% (4.6% organic), and fiscal 2027 guidance calls for further organic decline of 6.5% to 7.5%, on top of roughly $7.8 billion of net debt.
Bull Case
Look at where $8.60 sits against the valuation methods and the bull case is simply that the price has fallen below almost all of them. The inversion reads the stock as below-floor: at roughly 9 times operating income, the price sits under what even a 5% annual decline in operating profit would warrant. The earnings-power, relative-multiple, and growth-DCF families all support a higher value, and only the asset-based frame says expensive. In plain terms, the market is pricing DXC for continued, permanent decline, and the bet for a contrarian is that the business does not actually fall apart, it merely shrinks slowly while generating cash.
The cash is the crux, because a melting business that still throws off cash is a different animal from one that burns it. DXC generated $713 million of free cash flow in fiscal 2026, up 3.8%, and guides to about $600 million for fiscal 2027 against a market capitalization that the depressed share price keeps small. That cash funds buybacks ($250 million repurchased in fiscal 2026), and at this valuation every dollar of repurchase retires a meaningful slice of the float. Bookings were $3.3 billion in the fourth quarter for a book-to-bill of 1.07x, above one, meaning new work is being signed faster than existing work runs off, which is the first thing a turnaround needs to show.
The third leg is the mix shift. DXC runs three segments: Consulting and Engineering Services, Global Infrastructure Services, and an Insurance software and services business [DXC FY2025 10-K, accession 0001688568-25-000029]. The decline is concentrated in the legacy infrastructure side, while the higher-value consulting and insurance-software pieces are the parts management is trying to grow into. If new leadership can stabilize organic revenue, hold the adjusted EBIT margin in the guided 6% to 7% range, and keep converting to cash, the equity is worth far more than a price that has already written the company off. At this level, modest stabilization, not a return to growth, is all the bull case requires.
Bear Case
The threat to DXC is competitive disruption, and it has been playing out in the revenue line for years. The core of the business, Global Infrastructure Services, implements and operates the technology underpinning clients' IT [DXC FY2025 10-K, accession 0001688568-25-000029], which is precisely the work that the hyperscale cloud providers (AWS, Microsoft Azure, Google Cloud) and offshore-heavy rivals like TCS, Infosys, Accenture, and Cognizant have been taking over. Enterprises are migrating off the legacy data-center management that DXC was built on, and as they do, DXC's largest segment shrinks. The numbers are unambiguous: fiscal 2025 revenue fell 5.8% to $12.9 billion, with a 4.6% organic decline [DXC FY2025 10-K, accession 0001688568-25-000029], and the fourth quarter of fiscal 2026 was down 6.6% organically.
The guidance says the bleeding continues. Management guided fiscal 2027 to organic revenue decline of 6.5% to 7.5% in the first quarter, with an adjusted EBIT margin of just 6% to 7%. A book-to-bill above one is encouraging, but it has not yet been enough to offset the run-off of legacy contracts, and the reported GAAP results are ugly: a Q4 GAAP loss per share of $(0.84) and a negative GAAP EBIT margin, with the adjusted figures doing the heavy lifting in the narrative.
The leverage turns the slow decline into a real risk. Net debt of roughly $7.8 billion sits against an equity that the market values at a fraction of that, so the enterprise is mostly debt. Free cash flow of $600 million has to service that debt, fund the pension obligations that have swung results in the past, and support the buyback all at once. A levered, declining IT-services business competing against the cloud giants and the offshore majors is the textbook value trap: it looks cheap on every cash-flow multiple precisely because the cash flow is expected to keep shrinking. The methods that show value above $8.60 (June 27, 2026) assume the decline stabilizes; the bear case is that disruption is structural, the organic decline persists, and cheap stays cheap, or gets cheaper, as the legacy base keeps eroding faster than the new bookings can replace it.
Valuation
DXC is a deep-value, below-floor situation, and the method spread tells you the market has priced it for permanent decline. At $8.60 the inversion reads roughly a 9 times operating-income multiple and flags the price as below-floor, meaning it sits under what even a 5% annual operating-profit decline would warrant. The price is at or below most methods, which is the opposite of the premium names in the cohort.
The individual methods carry the asterisk that makes this a classic value-trap diagnostic. The DCF Perpetual Growth figure looks enormous ($170) only because of the low discount rate the model assigns, but the more telling input is the negative organic growth rate feeding it, and the DCF Exit Multiple lands at about $34.64 on depressed exit assumptions. The methods say the business is worth multiples of the price if its cash flow merely stabilizes, but cash flow stabilization is exactly the open question. A declining-revenue, highly-leveraged services company is the type where trailing-based methods systematically overstate value because they extrapolate a cash flow that the business may not sustain.
The honest synthesis: DXC is cheap on every cash-flow measure, and the cheapness is conditional on stabilization. Free cash flow of about $600 million guided for fiscal 2027, a book-to-bill above one, and a buyback at a depressed price are the ingredients of a turnaround if organic decline flattens. Net debt near $7.8 billion and persistent 6%-plus organic declines are the ingredients of a value trap if it does not. The valuation is a binary on whether management can arrest the legacy run-off, and the price reflects deep skepticism that it can.
Catalysts
The most recent catalyst was the Q4 and full fiscal 2026 report on May 7, 2026. Revenue was $3.13 billion for the quarter, down 1.2% as reported and 6.6% organically, with bookings of $3.3 billion and a book-to-bill of 1.07x. The GAAP result was a loss of $(0.84) per share with a negative EBIT margin, while non-GAAP diluted EPS was $0.77. Full-year free cash flow reached $713 million, up 3.8%, and the company repurchased $250 million of stock during the year. The mixed print (EPS beat on a revenue miss) is the recurring pattern: margins and cash hold up better than the top line.
Guidance set the bar for the turnaround. Fiscal 2027 calls for an adjusted EBIT margin of 6% to 7%, non-GAAP diluted EPS of $2.40 to $2.90, free cash flow of about $600 million, and a Q1 organic revenue decline of 6.5% to 7.5%. The single most important catalyst is the trajectory of organic revenue: any sign that the decline is flattening, driven by the book-to-bill staying above one and the higher-value consulting and insurance-software segments offsetting the legacy infrastructure run-off, would be the inflection the depressed price is not yet giving credit for.
The other watch items are execution and the balance sheet. Progress on stabilizing Global Infrastructure Services against cloud and offshore competition, the pace of buybacks at the low share price, and management's handling of the roughly $7.8 billion net-debt load and pension obligations are the markers that separate a turnaround from a value trap. Quarterly bookings and organic-growth prints are the near-term signals to track.
Sources: https://www.prnewswire.com/news-releases/dxc-technology-reports-fourth-quarter-and-full-fiscal-year-2026-results-302766066.html , https://investors.dxc.com/investor-news/news-details/2026/DXC-Technology-Reports-Fourth-Quarter-and-Full-Fiscal-Year-2026-Results/default.aspx , https://www.investing.com/news/transcripts/earnings-call-transcript-dxc-technology-q4-2026-eps-beats-revenue-miss-93CH-4676870 , https://www.fool.com/earnings/call-transcripts/2026/05/08/dxc-dxc-q4-2026-earnings-call-transcript/
Peer Cohorts (Per Segment, With Filing Citations)
CES (reported)
- ACN (Accenture plc)
- FY2025 10-K: …entertainment, sports, content producers (including studios), content aggregators and streaming live events (sports) and media infrastructure providers, integrated advertising agencies and creative Enterprise technology, hardware, and associated manufacturing; semiconductor including silicon design and development,…
- FY2025 10-K: …our reporting segments. The percent of our revenues represented by each market is shown at right. Reinvention Services Effective September 1, 2025, we brought all of our services, which are described below, together into a single, integrated business unit called Reinvention Services. With this change, our…
- CTSH (COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION)
- FY2025 10-K: …Vice President Syntel Syntel Sterling Best Shores Mauritius Ltd. Tax Reform Act Tax Cuts and Jobs Act Term Loan Unsecured term loan under the Credit Agreement Third Circuit United States Court of Appeals for the Third Circuit Title VII Title VII of the Civil Rights Act of 1964, 42 U.S.C § 2000e et seq. TriZetto The…
- FY2025 10-K: …customers, markets and cultures and the ability to create solutions tailored to meet their individual business needs. Across industries, our clients are confronted with the risk of being disrupted by nimble, AI-native competitors. Our clients increasingly feel the need to transform and are therefore redirecting their…
- EPAM (EPAM SYSTEMS, INC.)
- FY2025 10-K: …us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueInputsLevel1Member epam:CreditFacility2021Member 2024-12-31 0001352010 us-gaap:RevolvingCreditFacilityMember us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueInputsLevel2Member epam:CreditFacility2021Member 2024-12-31…
- FY2025 10-K: …to the Company's Annual Report on Form 10-K for the year ending December 31, 2024, filed on February 28, 2025, SEC File No. 001-35418) 21.1* Subsidiaries of the Registrant 23.1* Consent of Independent Registered Public Accounting Firm 31.1* Certification of the Chief Executive Officer pursuant to Rule…
- IBM (INTERNATIONAL BUSINESS MACHINES CORP)
- FY2025 10-K: …to note E, "Acquisitions & Divestitures," for additional information. Table of Contents Notes to the Consolidated Financial Statements International Business Machines Corporation and Subsidiary Companies 67 Other Reportable Segment Items To ensure the efficient use of the company's space and equipment, several…
- FY2025 10-K: …of secured indebtedness and sale and leaseback transactions to 10 percent of the company's consolidated net tangible assets, and restrict the company's ability to merge or consolidate unless certain conditions are met. The credit facilities also include a covenant on the company's consolidated net interest expense…
- WIT (WIPRO LIMITED)
- (no filing in the citation store)
- IT (Gartner, Inc.)
- FY2025 10-K: …it:SeniorNotesDue2031Member us-gaap:SeniorNotesMember 2024-12-31 0000749251 us-gaap:FairValueInputsLevel2Member it:SeniorNotesDue2035Member us-gaap:SeniorNotesMember 2025-12-31 0000749251 us-gaap:FairValueInputsLevel2Member it:SeniorNotesDue2035Member us-gaap:SeniorNotesMember 2024-12-31 0000749251…
- FY2025 10-K: …RSUs under the 2025 grant will be made in 2026. (2) The Company expects that substantially all of the RSUs outstanding will vest in future periods. (3) As of December 31, 2025, the weighted average remaining contractual term of the RSUs outstanding was approximately 1.1 years. Common Stock Equivalents Common stock…
GIS (reported)
- HPE (HEWLETT PACKARD ENTERPRISE COMPANY)
- FY2025 10-K: …metal; a full suite of private cloud offerings that enable customers to self-manage or choose a fully managed experience; and a portfolio of world-class Private Cloud AI infrastructure delivered aaS. This segment also provides self-service private cloud on-demand with HPE GreenLake for Private Cloud Business Edition,…
- FY2025 10-K: …us-gaap:OtherNoncurrentAssetsMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:FairValueHedgingMember 2025-10-31 0001645590 us-gaap:InterestRateContractMember us-gaap:OtherCurrentLiabilitiesMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:FairValueHedgingMember 2025-10-31 0001645590…
- IBM (INTERNATIONAL BUSINESS MACHINES CORP)
- FY2025 10-K: …supports clients' mission-critical, on-premise workloads in industries such as banking, airlines and retail. This includes transaction processing software such as Customer Information Control System and storage software, analytics and integration software running on IBM operating systems, AI assistants for IBM Z, and…
- FY2025 10-K: …automation, and DataStax to enhance our AI capabilities around unstructured data. We announced our intention to acquire Confluent, addressing customer needs to scale real-time, high-volume and distributed event streaming with low latency and reduced cost. Collaborating to create value with clients and ecosystem…
- CTSH (COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION)
- FY2025 10-K: …are: • AI and analytics, which helps clients identify and adopt the best AI use cases for their enterprise and formulate actionable insights from unstructured data to drive a greater understanding of their customers and operations; • Cloud and infrastructure, which helps simplify and modernize IT environments,…
- FY2025 10-K: …to innovate and co-create with our clients. In order to achieve this vision and support our clients, we are focusing on accelerating growth, becoming an employer of choice and simplifying our operations through modernization and an AI-enabled IT roadmap. In executing our strategy, we seek to drive organic growth…
- ACN (Accenture plc)
- FY2025 10-K: …entertainment, sports, content producers (including studios), content aggregators and streaming live events (sports) and media infrastructure providers, integrated advertising agencies and creative Enterprise technology, hardware, and associated manufacturing; semiconductor including silicon design and development,…
- FY2025 10-K: :SalesRevenueNetMember 2022-09-01 2023-08-31 0001467373 country:IE us-gaap:GeographicConcentrationRiskMember us-gaap:SalesRevenueNetMember 2024-09-01 2025-08-31 0001467373 country:IE us-gaap:GeographicConcentrationRiskMember us-gaap:SalesRevenueNetMember 2022-09-01 2023-08-31 0001467373 country:IE…
- WIT (WIPRO LIMITED)
- (no filing in the citation store)
- KD (Kyndryl Holdings, Inc.)
- FY2025 10-K: …hybrid IT estates, data and operations. Concurrently, we provide resiliency services that include a mix of business continuity planning and cloud-based disaster recovery capabilities (composed of experts, digital tools, automation and failover environments). These services allow our customers to operate without issue…
- FY2025 10-K: …distributed computing, enterprise networks and storage environments. ● Application, Data & AI Services: We provide end-to-end enterprise data services, including data transformation, data architecture and management, data governance and compliance and data migration. We support chief digital officers, chief…
Insurance (reported)
- GWRE (Guidewire Software, Inc.)
- FY2025 10-K: …to manage key functional areas of P&C insurance, including product definition, underwriting and policy administration, claims management, and billing. Product definition specifies the insurance coverage, pricing, and financial and legal terms of insurance policies. Underwriting and policy administration includes…
- FY2025 10-K: …social inflation that is contributing to higher claims severity across lines of business, that demand faster product definition, risk selection and pricing, and market entry or exit. These pressures are heightened by climate-driven risk events such as wildfires and floods, growing competition from digital-first…
- SSNC (SS&C TECHNOLOGIES HOLDINGS, INC.)
- FY2025 10-K: …against the threat of system disruptions and security breaches, there is no guarantee that our systems and procedures are adequate to protect against all security breaches. If our software-enabled services are disrupted or fail for any reason, or if our systems or facilities are infiltrated or damaged by unauthorized…
- FY2025 10-K: …cause loss of revenues, divert development resources, increase product liability and warranty claims, and increase service and support costs. We cannot be certain that, despite testing by us and our clients, errors will not be found in new products or new versions of products. Moreover, our clients engage in complex…
- VRSK (Verisk Analytics, Inc.)
- FY2025 10-K: …several state fraud bureaus, and many law enforcement agencies involved in the investigation and prosecution of insurance fraud. Insurance repair contractors and service providers in the U.S. and Canada with computerized estimating systems commonly use our building and repair cost estimation pricing data. Our…
- FY2025 10-K: …lines of business, focusing on the fundamental building blocks of insurance programs, the prediction of loss, the selection and pricing of risk, and compliance with their reporting requirements in each U.S. state in which they operate. We also develop and utilize machine-learned and artificially intelligent models to…
- DOX (AMDOCS LIMITED)
- (no filing in the citation store)
- SAP (SAP SE)
- FY2025 20-F: …in its realization of gain or loss for U.S. federal income tax purposes. U.S. Information Reporting and Backup Withholding Dividend payments made to holders and proceeds paid from the sale of shares or ADRs are subject to information reporting to the Internal Revenue Service (IRS) and will be subject to backup…
- FY2025 20-F: 1 Related - Party Transactions 101 ITEM 8. FINANCIAL INFORMATION 102 Consolidated Financial Statements and Financial Statement Schedule 102 Other Financial Information 102 Significant Changes 102 ITEM 9. THE OFFER AND LISTING 103 ITEM 10. ADDITIONAL INFORMATION 103 Articles of Incorporation 103…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.