IT services provider Computer Sciences Corp. (CSC) will announce its fourth quarter earnings results on February 8 before the market opens. The focus will also be on the impact from the Federal budget uncertainty besides the performance of North American Public Sector. But the company seems to be banking on its managed services sector and business solutions and services divisions.
However, the margins are holding key to its results. In the last four quarters, both gross margin as well as operating margin is witnessing downtrend indicating weakness.
Street analysts are expecting the Falls Church, Virginia-based Computer Sciences to deliver earnings of 58 cents a share on revenues of $3.98 billion. This represents earnings downside of 62 percent on revenues fall of 0.6 percent.
Last year, the company earned $1.54 a share on revenues of $4.01 billion.
Significantly, analysts have reduced their earnings target to 58 cents a share from 65 cents a share 60 days back and $1.19 a share 90 days ago.
Q2 Results
Computer Sciences reported a net loss of $2.88 billion or $18.56 loss a share versus net income of $184 million or $1.18 a share in the year-ago quarter. On an adjusted basis, net income was $146 million or 94 cents a share for the second quarter.
Revenues rose 1 percent to $3.97 billion from $3.94 billion in the previous year quarters. Analysts' had earnings target of 68 cents a share on revenues of $4.03 billion.
Significantly, the company reduced its fiscal 2012 adjusted earnings outlook to $4.05 - $4.10 a share from $4.70 - $4.80 a share. CSC also cut its higher end of its revenue forecast to $16.5 - $16.7 billion from $16.5 - $17 billion projected earlier.
During the last four quarters, the company's earnings failed to meet analysts' estimations in only one quarter and topped expectations in other three quarters. CSC earned 85 cents a share, $1.18 a share, $1.09 a share and $1.54 a share respectively in the last four quarters.
The company generated revenues of $3.966 billion, $4.033 billion, $4.202 billion and $3.995 billion respectively during the past four quarters.
Gross margin during the same period was 11.5 percent, 16.56 percent, 19.42 percent and 19.37 percent respectively. The company suffered operating loss in the second quarter due to unusual items. But in the preceding three quarters, it was 2.5 percent, 6.71 percent and 5.76 percent respectively.
Analyst Take
One analyst has Strong Buy rating, while another analyst has Buy rating for CSC shares. But ten analysts are recommending Hold, whereas two are rating the stock as Underperform. One analyst recommends the stock as Sell.
iStock Punch
Weakness from federal budget may continue to affect its top line. The company's margins are poorly placed. It is in fact margins that hold key to its earnings number. This is not a right time to enter the counter given its performance.
{$end}Related Articles:RadioShack slides in after-hours trading
Here's How Xilinx Is Making You So Much, So Fast
Tags: 2012 Rising Stocks ,ALGN ,Best Rising Stocks ,Best Stocks To Invest In ,COMP ,DJIA ,MCK ,RSH ,S ,SPX ,Best China Stocks 2012
No comments:
Post a Comment