Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Computer Sciences Corp.
So what: Reported EPS of $1.54 beat the consensus estimate of $1.48. However, "sluggish" contract signings in the North American public sector led the company to lower EPS guidance for the fiscal year (with just the current quarter to go) to $5.20 versus a consensus estimate of $5.39.
Now what: Because $3.64 of EPS is already in the bag year-to-date, the estimate for the current quarter is likely to drop from $1.81 to around $1.56. With government spending under pressure, the weakness could continue for an extended period, and earnings estimates beyond the current quarter are likely too high. A P/E ratio of 11.1 with a 1.4% dividend yield may seem attractive, but investors might be better off waiting for the news flow to turn positive before jumping into the stock.
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