Q4 Rundown: DXC (NYSE:DXC) Vs Other IT Services & Consulting Stocks
April 8, 2025
The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how DXC (NYSE:DXC) and the rest of the it services & consulting stocks fared in Q4.
IT Services & Consulting companies stand to benefit from increasing enterprise demand for digital transformation, AI-driven automation, and cybersecurity resilience. Many enterprises can't attack these topics alone and need IT services and consulting on everything from technical advice to implementation. Challenges in meeting these needs will include finding talent in specialized and evolving IT fields. While AI and automation can enhance productivity, they also threaten to commoditize certain consulting functions. Another ongoing challenge will be pricing pressures from offshore IT service providers, which have lower labor costs and increasingly equal access to advanced technology like AI.
The 8 it services & consulting stocks we track reported a strong Q4. As a group, revenues beat analysts’ consensus estimates by 1% while next quarter’s revenue guidance was 0.8% above.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 25.7% since the latest earnings results.
DXC (NYSE:DXC)
Born from the 2017 merger of Computer Sciences Corporation and HP Enterprise's services business, DXC Technology (NYSE:DXC) is a global IT services company that helps businesses transform their technology infrastructure, applications, and operations.
DXC reported revenues of $3.23 billion, down 5.1% year on year. This print fell short of analysts’ expectations by 0.9%, but it was still a strong quarter for the company with a solid beat of analysts’ EPS estimates and an impressive beat of analysts’ full-year EPS guidance estimates.
DXC delivered the weakest full-year guidance update of the whole group. The stock is down 33.4% since reporting and currently trades at $15.05.
With engineering centers across the Americas, Europe, and India serving Fortune 1000 companies, Grid Dynamics (NASDAQ:GDYN) provides technology consulting, engineering, and analytics services to help large enterprises modernize their technology systems and business processes.
Grid Dynamics reported revenues of $100.3 million, up 28.5% year on year, outperforming analysts’ expectations by 4.3%. The business had an exceptional quarter with a solid beat of analysts’ EPS estimates and full-year revenue guidance exceeding analysts’ expectations.
Grid Dynamics delivered the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. The stock is down 28.3% since reporting. It currently trades at $14.69.
Evolving from its roots in IT staffing to become a high-end technology consulting powerhouse, ASGN (NYSE:ASGN) provides specialized IT consulting services and staffing solutions to Fortune 1000 companies and U.S. federal government agencies.
ASGN reported revenues of $985 million, down 8.3% year on year, falling short of analysts’ expectations by 1.5%. It was a slower quarter with EPS guidance for next quarter missing analysts' estimates.
ASGN delivered the slowest revenue growth in the group. As expected, the stock is down 30.7% since the results and currently trades at $60.86.
Born from IBM's managed infrastructure services business in a 2021 spinoff, Kyndryl (NYSE:KD) is the world's largest IT infrastructure services provider that designs, builds, and manages technology environments for enterprise customers.
Kyndryl reported revenues of $3.74 billion, down 4.9% year on year. This print came in 2% below analysts' expectations. In spite of that, it was a very strong quarter as it recorded an impressive beat of analysts’ EPS estimates and revenue guidance for next quarter exceeding analysts’ expectations.
Kyndryl had the weakest performance against analyst estimates among its peers. The stock is down 24.9% since reporting and currently trades at $28.46.
With over 2,500 research experts guiding organizations through complex technology landscapes, Gartner (NYSE:IT) provides research, advisory services, and conferences that help executives make better decisions about technology and other business priorities.
Gartner reported revenues of $1.72 billion, up 8.1% year on year. This result beat analysts’ expectations by 1.4%. It was an exceptional quarter as it also logged a solid beat of analysts’ EPS estimates and a narrow beat of analysts’ constant currency revenue estimates.
The stock is down 28.5% since reporting and currently trades at $391.80.
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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