Is DXC Technology Company (NYSE:DXC) Worth Looking At Closely?

DXC Technology Company (NYSE:DXC) has seen a significant share price rise of 24% in the past couple of months on the NYSE. While good news for shareholders, the company has traded much higher in the past year. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine DXC Technology’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

DXC Technology’s share price rise

According to our price multiple model, where we compare the company’s price-to-earnings ratio to the industry average, the stock currently looks expensive. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 36.79x is currently well-above the industry average of 27.72x, meaning that it is trading at a more expensive price relative to its peers.

“The stock’s ratio of 36.79x is currently well-above the industry average of 27.72x, meaning that it is trading at a more expensive price relative to its peers.”

If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that DXC Technology’s share is fairly volatile (i.e., its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

DXC Technology’s growth prospects

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations.

With profit expected to more than double over the next couple of years, the future seems bright for DXC Technology. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

Investing in DXC Technology

Are you a shareholder? It seems like the market has well and truly priced in DXC’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe DXC should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on DXC for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for DXC, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.