DXC - Embedded Expectations Analysis - 2021 07 02
DXC Technology Company (DXC:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 14.4x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, and management may have concerns about their revenue growth, margin headwinds, and cash flowSpecifically, management may lack confidence in their ability to improve the customer and employee experience for Zurich Insurance, cross-sell solutions to existing accounts, and maintain client work renewals. In addition, they may lack confidence in their ability to deliver positive organic revenue growth, mitigate margin headwinds, and improve cash flows. Furthermore, they may be overstating their focus on reducing their environmental footprint and the potential of their enterprise technology stack integration. Finally, they may lack confidence in their ability to maintain an investment-grade credit profile, reduce restructuring costs, and gain a firm understanding of their customers' IT infrastructure
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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
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- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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