DXC

DXC is a melting-ice-cube IT-services business priced like one — and that's the opportunity. Revenue has fallen five straight years ($16.3B FY22 → $12.6B FY26), with FY26 organic revenue down 4.8% and an overall book-to-bill of 0.98x, so there is no top-line inflection yet. GAAP earnings are ugly: net income collapsed 95% to $18M and diluted EPS to $0.10 (from $2.10), dragged down by $169M of pension actuarial/settlement losses and a punitive $290M tax bill on just $318M of pretax income. On the headline P/E of 88.6 the stock looks expensive — but that number is noise.

The real story is cash. Management reports adjusted diluted EPS of $3.23 (vs. a $8.86 price, ~2.7x) and $713M of free cash flow against a $1.45B market cap — a free-cash-flow yield near 50%. Adjusted EBIT was $970M at a 7.7% margin. The company is using that cash for shareholders and the balance sheet: $249M of buybacks shrank the share count ~9.8% in one year, and long-term debt was cut 21.5% to $3.0B against $1.74B of cash. Liquidity is fine (current ratio ~1.36x) even with leverage of 3.29x liabilities/equity and a deeply negative retained-earnings deficit (-$2.94B) that reflects past write-downs, not current cash distress.