Shares of DXC Technology (DXC – Get Report) were losing almost 31% in trading Friday following news that the company’s profit margins were getting squeezed, and the company said its earnings for the year would fall far short of Wall Street estimates.
The company reported adjusted profit from continuing operations of $1.74 a share in the first quarter of fiscal 2020, down from $1.93 a year ago. Wall Street analysts were expecting earnings of $1.71 a share. Revenue dipped to $4.9 billion in the three-month period from $5.3 billion a year ago.
But it was the falling profit margins combined with a disappointing full-year profit outlook from management that spooked investors.
Adjusted earnings before interest and taxes (EBIT) as a percentage of revenue fell to 13.3% in the quarter, down from 15.2% a year ago.
CEO Mike Lawrie said adjusted earnings per share for the full year will now likely be in the range of $7 to $7.75, far below the average Wall Street estimate of $8.20 for the year.
The stock also was downgraded to sector weight from overweight by analysts at KeyBanc Capital, and downgraded to market perform at BMO Capital.
Shares fell 30.66% to $35.82 in trading Friday.
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