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Why Unisys Stock Fell Sharply on Wednesday

By Daniel Sparks – Nov 3, 2021 at 2:01PM

Key Points

  • The information technology company's revenue declined year over year.
  • Despite the revenue miss, management reiterated its full-year guidance.
  • Unisys saw double-digit growth in its free cash flow.

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Top- and bottom-line misses spooked some investors, but management is optimistic.

What happened

Shares of information technology company Unisys (UIS -1.55%) tumbled on Wednesday. As of 1 p.m. EDT, the stock was down 16.5%.

The tech stock's sharp move lower was due to Unisys' worse-than-expected third-quarter results. On Tuesday afternoon, Unisys reported revenue and non-GAAP earnings per share that came in below analysts' average forecasts.

A chalkboard sketch of a chart showing a stock price falling.

Image source: Getty Images.

So what

The tech company's revenue declined from $495 million in the year-ago period to $488 million. Analysts, on average, were expecting revenue to increase to about $499 million. Unisys posted non-GAAP (adjusted) earnings per share of $0.10, missing analysts' average forecast of $0.16 in per-share earnings.

But management was quick to point out some positives from the quarter. Namely, gross profit and free cash flow both increased year over year. Gross profit was $126.9 million, up from $119.9 million in the year-ago period. This was helped by the company's gross profit margin expanding from 24.2% in the third quarter of 2020 to 26%. Meanwhile, free cash flow rose 14.9% year over year to $39.4 million.

Unisys also announced that its chief financial officer, Mike Thomson, is now slated to become president and chief operating officer. The move will be made official when the company hires a replacement chief financial officer.

Now what

Despite the quarter's worse-than-expected results, management reaffirmed its full-year guidance for 0% to 2% year-over-year revenue growth and 17.25% to 18.25% growth in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).

Daniel Sparks has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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