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Why Shares of Unisys Corporation Soared

By Daniel Sparks – Oct 26, 2016 at 12:58PM

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Better-than-expected results and improving cash flow have investors more optimistic about Unisys stock.

Image source: Getty Images.

What happened

Information technology company Unisys Corporation (UIS 4.87%) soared as high as 21.8% on Wednesday after the company reported better-than-expected revenue and earnings per share. The stock is up 17.6% as of 12:30 p.m. EDT.

So what

For its third quarter, Unisys reported revenue and a loss per share of $683 million and $0.56, respectively. These results were ahead of consensus analyst estimates for revenue of $674 million and a loss per share of $0.87.

But perhaps more notable than the company's revenue and EPS was its significant cash flow improvement compared to the year-ago quarter. Operating cash flow and free cash flow were $43 million and $6 million, well above the year-ago quarter's negative operating cash flow and free cash flow of $44 million and $100 million.

These results extend a longer period of improving cash flow. The third quarter represented Unisys' fourth quarter in a row of positive operating cash flow.

Now what

Following the solid quarter, Unisys said it was maintaining its full-year outlook. Furthermore, the company said it will keep working to improve operating profit margin and cash flow generation. In addition, management said it will continue to clarify its value proposition by "bringing a pervasive security focus to all of our offerings," said Unisys CEO Peter Altabef in a press release about the third quarter.

Daniel Sparks has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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