UIS vs. DXC: Which IT Services Stock is the Better Buy Now?

DXC Technology is positioned as the more compelling investment over Unisys (UIS) in the IT services sector, driven by its operational stabilization and strategic execution. DXC reported a strong 1.2 book-to-bill ratio and 20% bookings growth in 4Q25, integrating AI into its offerings, and ended fiscal 2025 with $1.8 billion in cash. While Unisys shows encouraging momentum with over 80% year-over-year total contract value growth in Q1 2025 and AI advancements, it faces near-term revenue headwinds and execution risks, making DXC's consistent fundamentals and strategic clarity more attractive for investors.

Analysis

DXC Technology (DXC) and Unisys (UIS) are both legacy IT services firms undergoing significant strategic transformations, but they present contrasting near-term outlooks. DXC is demonstrating clear momentum in its turnaround under new leadership, evidenced by a strong 1.2 book-to-bill ratio and a 20% year-over-year increase in bookings in its fourth-quarter fiscal 2025. The company's financial health is solid, ending its fiscal year with $1.8 billion in cash and $687 million in free cash flow, enabling debt reduction and planned share repurchases. In contrast, Unisys shows promising business development with its total contract value surging over 80% year-over-year in its first quarter of 2025 and a growing backlog of $2.9 billion, driven by demand in cybersecurity and device services. However, Unisys faces explicit short-term revenue headwinds from deal delays and reduced discretionary spending. Despite a Zacks Consensus Estimate projecting a 28.9% EPS increase for UIS in 2025, versus an 11.1% projected decline for DXC in fiscal 2026, the market has punished both stocks year-to-date, with UIS down 30% and DXC down 27%. Both trade at depressed valuations relative to their one-year medians, with UIS at a 4.54x forward P/E and DXC at a 4.79x forward sales multiple, reflecting investor caution.

Key Decisions for Investors

• Investors may favor DXC Technology as the more stable turnaround play, given its operational momentum, strong 1.2 book-to-bill ratio, and commitment to shareholder returns, despite a projected earnings decline in fiscal 2026.
• Unisys could be considered by investors with a higher risk appetite, as its significant contract value growth and low forward P/E ratio of 4.54x offer potential upside, but this is contingent on the company successfully navigating near-term revenue recognition challenges.
• Closely monitor execution on key metrics for both companies: DXC's ability to maintain its bookings growth and Unisys's success in converting its substantial backlog into revenue.