DXC

DXC Technology Company

TMT


Presented:09/24/2018
Price:$94.34
Cap:$26.52B
Current Price:$20.37
Cap:$3.68B

Presented

Date09/24/2018
Price$94.34
Market Cap$26.52B
Ent Value$28.14B
P/E Ratio14.76x
Book Value$40.71
Div Yield0.4%
Shares O/S281.16M
Ave Daily Vol1,860,564
Short Int1.42%

Current

Price$20.37
Market Cap$3.68B
DXC Technology Co. provides technology consulting, outsourcing and support services. It operates through the following segments: Global Business Services (GBS), Global Infrastructure Services (GIS) and United States Public Sector (USPS). The GBS segment provides technology solutions that help clients address challenges and accelerates the digital transformations that is tailored to each client's specific objectives. The GIS segment offers to deliver predictable outcomes and measurable results, while reducing business risk and operational costs for clients. The USPS segment delivers IT services and business solutions to all levels of government in the United States. The company was founded on May 19, 2016 and is headquartered in Tysons, VA.

Publicly traded companies mentioned herein: Accenture PLC (ACN), Amazon.com Inc (AMZN), DXC Technology Co (DXC), Hewlett Packard Enterprise Co (HPE), International Business Machines Corp (IBM), Perspecta Inc (PRSP)

Highlights

The presenter is long shares of DXC Technology (DXC) in the mid-$90s, as he sees the potential for the business mix to shift in favor of higher growth “digital" consulting (at the expense of the declining legacy outsourcing business). Additionally, DXC’s CEO, Mike Lawrie, has a great track record of cutting costs and creating value for shareholders. The balance sheet is under levered at sub-1x net debt, and it looks like there’s ~$750MM of cost savings to be had by tweaking DXC’s workforce. If Lawrie can execute, DXC could earn $10/share in 2020. With the stock presently trading at the lowest P/E multiple in the peer group, under 10x his out-year estimate, investors are “not paying for any upside” when the stock could see a 50%+ gain in 12 - 15 months.

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Idea Discussion

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