Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at DXC (NYSE:DXC) and the best and worst performers in the it services & consulting industry.
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 7 it services & consulting stocks we track reported a satisfactory Q1. As a group, revenues beat analysts’ consensus estimates by 1% while next quarter’s revenue guidance was in line.
Thankfully, share prices of the companies have been resilient as they are up 5.7% on average 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 $3.17 billion, down 6.4% year on year. This print exceeded analysts’ expectations by 0.9%. Despite the top-line beat, it was still a slower quarter with EPS guidance for next quarter missing analysts' estimates.
DXC Total Revenue
DXC delivered the weakest full-year guidance update of the whole group. Unsurprisingly, the stock is down 7.8% since reporting and currently trades at $15.28.
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 $100.4 million, up 25.8% year on year, outperforming analysts’ expectations by 2%. The business had a very strong quarter with an impressive beat of analysts’ EPS estimates and full-year revenue guidance beating analysts’ expectations.
Grid Dynamics Total Revenue
Grid Dynamics achieved the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $14.07.
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 $968.3 million, down 7.7% year on year, exceeding analysts’ expectations by 0.6%. Still, it was a slower quarter as it posted a miss of analysts’ EPS estimates.
ASGN delivered the slowest revenue growth in the group. As expected, the stock is down 3.8% since the results and currently trades at $56.29.
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 $1.53 billion, up 4.2% year on year. This result was in line with analysts’ expectations. It was a strong quarter as it also produced a solid beat of analysts’ EPS estimates.
Gartner had the weakest performance against analyst estimates among its peers. The stock is up 5.2% since reporting and currently trades at $449.52.
Founded in 1993 during the early days of offshore software development, EPAM Systems (NYSE:EPAM) provides digital engineering, cloud, and AI transformation services to help global enterprises and startups modernize their technology systems and create digital products.
EPAM reported revenues of $1.30 billion, up 11.7% year on year. This print beat analysts’ expectations by 1.6%. Overall, it was a very strong quarter as it also put up a solid beat of analysts’ constant currency revenue estimates.
The stock is up 16.1% since reporting and currently trades at $185.15.
Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.
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