DXC Technology Co (NYSE: DXC) stock investors panic on its future

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DXC Technology Co (NYSE: DXC) stock had fallen about 31% on 9th August 2019 (as of 9:45 am GMT-4; Source: Google finance) as the company reduced the annual guidance. The company has reported fiscal first-quarter net income of $168 million. Adjusted free cash flow in the quarter was $72 million or 15% of adjusted net income. And this reflects the timing of annual payments for software licenses and maintenance, the investment made to consolidate real estate facilities and the timing of refresh programs on a few large accounts. As a result, the CapEx was $357 million in the quarter or 7.3% of revenue, but the company expects the CapEx to moderate over the course of the year.

Furthermore, cash at the end of the quarter was $1.9 billion. During the quarter, the company has funded the Luxoft acquisition with $2 billion of additional debt. The company has also paid down $430 million of current maturities of long-term debt. At the end of the quarter, the total debt was $9.4 billion including capitalized leases.

DXC Technology Co (NYSE: DXC) stock investors panic on its future

DXC in the first quarter of FY 20 has reported the adjusted earnings per share of $1.74, beating the analysts’ estimates for the adjusted earnings per share of $1.71, according to FactSet. The company had reported 4.89 percent fall in the adjusted revenue to $4.89 billion in the first quarter of FY 20, beating the analysts’ estimates for revenue of $4.86 billion. Adjusted EBIT in the quarter was $652 million. Adjusted EBIT margin was 13.3%, which is lower than expected driven by delays in executing on the cost takeout plans.

Moreover, GBS revenue was $2.16 billion in the first quarter, up 0.5% year-over-year in constant currency. In the first quarter, GBS segment profit was $366 million, and the profit margin was 17% compared with 18.2% in the prior year. GIS revenue was $2.73 billion in the first quarter. GIS segment profit in the first quarter was $340 million, and the profit margin was 12.4%.

Additionally, during the quarter, the company has paid $51 million in dividends. The company has also repurchased $400 million of shares through a combination of open market purchases and an accelerated share repurchase program. In total, the company has returned $451 million in capital to shareholders

DXC now expects adjusted earnings to be in the range of $7 to $7.75 a share for the year on revenue expected to be in the range of $20.2 billion to $20.7 billion, after previously forecasting $7.75 to $8.50 a share on sales of $20.7 billion to $21.2 billion.

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