Head-To-Head Comparison: DXC Technology (NYSE:DXC) versus Leidos (NYSE:LDOS)

DXC Technology (NYSE:DXC) and Leidos (NYSE:LDOS) are both computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, risk, earnings, valuation, analyst recommendations, dividends and institutional ownership.

Dividends

DXC Technology pays an annual dividend of $0.84 per share and has a dividend yield of 6.8%. Leidos pays an annual dividend of $1.60 per share and has a dividend yield of 0.8%. DXC Technology pays out 41.4% of its earnings in the form of a dividend. Leidos pays out 14.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Leidos has raised its dividend for 6 consecutive years.

Risk and Volatility

DXC Technology has a beta of 1.15, suggesting that its share price is 15% more volatile than the S&P 500. Comparatively, Leidos has a beta of 0.69, suggesting that its share price is 31% less volatile than the S&P 500.

Insider & Institutional Ownership

96.2% of DXC Technology shares are held by institutional investors. Comparatively, 76.1% of Leidos shares are held by institutional investors. 0.6% of DXC Technology shares are held by company insiders. Comparatively, 0.7% of Leidos shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current recommendations and price targets for DXC Technology and Leidos, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
DXC Technology	2	6	0	0	1.75
Leidos	0	7	10	0	2.59

DXC Technology currently has a consensus target price of $15.00, suggesting a potential upside of 22.30%. Leidos has a consensus target price of $199.23, suggesting a potential upside of 5.30%. Given DXC Technology’s higher possible upside, equities analysts plainly believe DXC Technology is more favorable than Leidos.

Profitability

This table compares DXC Technology and Leidos’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
DXC Technology	2.96%	18.59%	4.69%
Leidos	8.11%	33.02%	11.40%

Valuation and Earnings

This table compares DXC Technology and Leidos”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
DXC Technology	$12.71 billion	0.17	$389.00 million	$2.03	6.04
Leidos	$16.66 billion	1.45	$1.25 billion	$10.72	17.65

Leidos has higher revenue and earnings than DXC Technology. DXC Technology is trading at a lower price-to-earnings ratio than Leidos, indicating that it is currently the more affordable of the two stocks.

Summary

Leidos beats DXC Technology on 13 of the 17 factors compared between the two stocks.

About DXC Technology

DXC Technology Company, together with its subsidiaries, provides information technology services and solutions in the United States, the United Kingdom, rest of Europe, Australia, and internationally. It operates in two segments, Global Business Services (GBS) and Global Infrastructure Services (GIS). The GBS segment offers a portfolio of analytics services and extensive partner ecosystem that help its customers to gain insights, automate operations, and accelerate their transformation journeys; and software engineering, consulting, and data analytics solutions, which enable businesses to run and manage their mission-critical functions, transform their operations, and develop new ways of doing business. This segment also simplifies, modernize, and accelerate mission-critical applications that support business agility and growth through applications services; provides proprietary modular insurance software and platforms; and operates a wide spectrum of insurance business process services, as well as helps to operate and improve bank cards, payment and lending process and operations, and customer experiences. The GIS segment offers security services, such as IT security, operations and culture for migrating to the cloud, protecting data with a zero-trust strategy, and manage a security operation center; and cloud infrastructure and IT outsourcing services. This segment also delivers a consumer-like experience, centralize IT management, and support services, as well as improves the total cost of ownership; and orchestrates hybrid cloud and multicloud environments. The company markets and sells its products through direct sales force to commercial businesses and public sector enterprises. DXC Technology Company was founded in 1959 and is headquartered in Ashburn, Virginia.

About Leidos

Leidos Holdings, Inc., together with its subsidiaries, provides services and solutions in the defense, intelligence, civil, and health markets in the United States and internationally. The company operates through Defense Solutions, Civil, and Health segments. The Defense Solutions segment offers national security solutions and systems for air, land, sea, space, and cyberspace for the U.S. Intelligence Community, the Department of Defense, the space development agency, the National Aeronautics and Space Administration, defense information systems agency, military services, and government agencies of U.S. allies abroad, as well as other federal and commercial customers in the national security industry. The solutions include technology, large-scale systems, command and control platforms, data analytics, logistics, and cybersecurity solutions, as well as intelligence analysis and operations support services to critical missions. The Civil segment provides systems integration services to air navigation service providers, including the federal aviation administration, the En route automation modernization, advanced technology oceanic procedure, time based flow management, terminal flight data management, geo-7, and future flight services, as well as enterprise-information display systems; and security detection services. It also offers information technology (IT) solutions in cloud computing, mobility, application modernization, DevOps, data center, network modernization, asset management, help desk operations, and digital workplace enablement; and environment, energy, and infrastructure services. The Health segment offers solutions to federal and commercial customers responsible for health and well-being of people, include health information management, managed health, digital modernization, and life sciences research and development services. Leidos Holdings, Inc. was founded in 1969 and is headquartered in Reston, Virginia.