Why Computer Sciences' Shares Are Flying High

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 (NYSE: CSC  ) are enjoying a monster post-earnings pop, which is par for the course for a company that's had double-digit moves for all but one of its earnings reports over the past two years. Today, the stock's 19% rise came on the back of a huge earnings beat, despite a slight decline in quarterly revenue year over year.

So what: Computer Sciences posted $3.85 billion in quarterly revenue, about 3% lower than its prior-year quarter and just under the consensus expectation of $3.88 billion. However, adjusted earnings per share, at $0.83, smashed through the Street's expectations of $0.47. There was a restructuring charge of $0.25 per share contributing to that great result, but even a $0.58 EPS result that removes that charge from the final tally significantly outperforms expectations. Computer Sciences also offered a strong guidance range for 2013, with EPS of $2.30 to $2.50 exceeding consensus estimates of $2.24 even on the low end.

Now what: Although Computer Sciences is not currently profitable, its free cash flow has not dipped below breakeven in years, and the most recently available free cash flow numbers result in a single-digit price-to-free-cash-flow ratio, even after today's surge. It's only after this pop that Computer Sciences has reached a new 52-week high, and it seems likely that further gains are within reach, as long as these optimistic projections hold true.

Want more news and updates? Add Computer Sciences to your Watchlist now.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2098929, ~/Articles/ArticleHandler.aspx, 11/28/2014 6:32:25 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement