Why Computer Sciences Shares Soared

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 government IT services specialist Computer Sciences (NYSE: CSC  ) surged 15% today after its quarterly results and outlook topped Wall Street expectations.

So what: CSC has suffered over past few years on the big cutback in government spending, but today's wide second-quarter beat -- EPS of $0.83 versus the consensus of just $0.47 -- coupled with upbeat guidance for the full year reinforces optimism over management's restructuring efforts. In fact, CSC's contract efficiency and cost-cutting initiatives led to improved operating margins of 7.7%, up from  negative 1.9% in the year-ago period, triggering plenty of good vibes over the company's profitability going forward.

Now what: Management now sees full-year 2013 EPS of $2.30-$2.50, nicely ahead of the average analyst estimate of $2.24. "There is much work to be completed but we are encouraged with the early results of our turnaround program," President and CEO Mike Lawrie said in a statement. Of course, when you couple CSC's still-hefty debt load with its 52-week high-hitting stock price, Fools might want to hold out for a wider margin of safety before buying into that optimism.

Interested in more info on CSC? Add it to your watchlist.


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.

DocumentId: 2098730, ~/Articles/ArticleHandler.aspx, 7/31/2014 8:41:31 PM

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