EARNINGS PREVIEW: COMPUTER SCIENCES
Computer Sciences Corporation (NYSE:CSC – News) is scheduled to make known the third entertain 2012 results on Feb 8, 2012, and we declare a disastrous disposition in the analysts’ estimates.
Second Quarter Recap
The association reported medium second entertain 2012 formula with earnings per share (:EPS) of 94 cents, comprehensively violence the Zacks Consensus Estimate of 68 cents. The company’s second entertain 2012 revenues inched up 0.79% year over year to $3.97 billion.
The association witnessed year-over-year income expansion in the Business Solutions & Services (:BSS) and the Managed Service Sector (:MSS) segments. Within the blurb segment, clever income expansion in the BSS shred was rather mitigated by the diseased MSS performance.
Across the 3 lines of business, new commercial operation awards in the reported entertain were $6.6 billion. North American Public Sector (:NPS) contributed $3.1 billion, MSS purebred $2.6 billion, and Business Solutions & Services sealed $0.9 billion of new business.
CSC posted an handling detriment domain of 1.89%, deteriorating extremely from the handling distinction domain of 7.75% in the year-ago quarter. The domain was negatively impacted by aloft price of services and a poignant organization to help the poor spoil assign during the quarter.
The association exited the entertain with $978.0 million in money and money equivalents, down from $1.67 billion reported in the prior quarter. CSC had a sum debt change of $3.26 billion with a debt-to-capitalization comparative measure of 40.8%.
While running for mercantile 2012, the association enclosed the grant from the iSoft acquisition. CSC expects new commercial operation awards in additional of $17 billion; revenues of we guess $16.5-$16.7 billion; handling domain of 6.00% and EPS of we guess $4.05-$4.10. Free money upsurge is approaching to be next to to or larger than 90% of net income for the year.
Agreement of Analysts
Out of the twelve analysts on condition that estimates for the third quarter, usually a single researcher lowered the guess over the final thirty days. Out of the 10 analysts covering the batch for mercantile 2012, a single researcher lowered the guess in the final thirty days, whilst nothing changed in the conflicting direction. Similarly, for mercantile 2013, out of the thirteen analysts tracking the stock, 3 analysts lowered their estimates in the final thirty days, whilst nothing changed in the conflicting direction.
The association has not long ago resumed discussions with NHS and Cabinet officials per the chit of bargain (:MOU), which enclosed due re-negotiated conditions of the contract. However, the association after on sensitive that conjunction the MOU nor the many not long ago discussed stipulate legislative addition would be authorized by the UK government.
As a outcome of this new development, CSC would have to comprehend a element spoil in the third entertain of 2012 on the net investment in the contract. This spoil could be next to to CSC’s net investment for the stipulate ($1.5B as of Nov. 30, 2011) and may also include a little other costs, heading CSC to reduce the formerly supposing mercantile year 2012 guidance.
Analysts are also of the perspective that issues other than the NHS stipulate may poise a estimable plea to CSC. These include the Audit Committee review in to CSC’s accounting practices instituted in May 2011, which will lead to poignant authorised and accounting costs.
Secondly, the association is also caught with a category movement authorised case by mixed shareholders who lay violations of bonds laws in tie with commercial operation representation. A preference on the same emanate is pending, and may outcome in intensity waste if it goes opposite the company.
Magnitude of Estimate Revisions
The bulk of revisions is also estimable given CSC reported the second entertain results. Overall, estimates for the arriving entertain have left down from $1.17 to 57 cents in the final 90 days.
For mercantile 2012, estimates have decreased to $3.68 from $4.30 in the final 90 days. Moreover, for mercantile 2013, the estimates have left down from $4.62 to $3.71 over the same period.
Recommendation
We are distressed about the heated foe in the IT and clouded cover computing space from both large and tiny players such as Accenture (NYSE:ACN – News) and Hewlett-Packard Company (NYSE:HPQ – News). Moreover, with supervision orders approaching to dry up to a certain border and the NHS complaint persisting, slow authorised issues are also creation it formidable for Computer Sciences.
Moreover, the direct for the company’s products in Europe is not enlivening for the arriving quarters.
The association has a Zacks #5 Rank, implying a short-term Strong-Sell rating.
Read the Full Research Report on CSC
Read the Full Research Report on ACN
Read the Full Research Report on HPQ
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Computer Sciences Corporation (NYSE:CSC – News) is scheduled to make known the third entertain 2012 results on Feb 8, 2012, and we declare a disastrous disposition in the analysts’ estimates.
Second Quarter Recap
The association reported medium second entertain 2012 formula with earnings per share (:EPS) of 94 cents, comprehensively violence the Zacks Consensus Estimate of 68 cents. The company’s second entertain 2012 revenues inched up 0.79% year over year to $3.97 billion.
The association witnessed year-over-year income expansion in the Business Solutions & Services (:BSS) and the Managed Service Sector (:MSS) segments. Within the blurb segment, clever income expansion in the BSS shred was rather mitigated by the diseased MSS performance.
Across the 3 lines of business, new commercial operation awards in the reported entertain were $6.6 billion. North American Public Sector (:NPS) contributed $3.1 billion, MSS purebred $2.6 billion, and Business Solutions & Services sealed $0.9 billion of new business.
CSC posted an handling detriment domain of 1.89%, deteriorating extremely from the handling distinction domain of 7.75% in the year-ago quarter. The domain was negatively impacted by aloft price of services and a poignant organization to help the poor spoil assign during the quarter.
The association exited the entertain with $978.0 million in money and money equivalents, down from $1.67 billion reported in the prior quarter. CSC had a sum debt change of $3.26 billion with a debt-to-capitalization comparative measure of 40.8%.
While running for mercantile 2012, the association enclosed the grant from the iSoft acquisition. CSC expects new commercial operation awards in additional of $17 billion; revenues of we guess $16.5-$16.7 billion; handling domain of 6.00% and EPS of we guess $4.05-$4.10. Free money upsurge is approaching to be next to to or larger than 90% of net income for the year.
Agreement of Analysts
Out of the twelve analysts on condition that estimates for the third quarter, usually a single researcher lowered the guess over the final thirty days. Out of the 10 analysts covering the batch for mercantile 2012, a single researcher lowered the guess in the final thirty days, whilst nothing changed in the conflicting direction. Similarly, for mercantile 2013, out of the thirteen analysts tracking the stock, 3 analysts lowered their estimates in the final thirty days, whilst nothing changed in the conflicting direction.
The association has not long ago resumed discussions with NHS and Cabinet officials per the chit of bargain (:MOU), which enclosed due re-negotiated conditions of the contract. However, the association after on sensitive that conjunction the MOU nor the many not long ago discussed stipulate legislative addition would be authorized by the UK government.
As a outcome of this new development, CSC would have to comprehend a element spoil in the third entertain of 2012 on the net investment in the contract. This spoil could be next to to CSC’s net investment for the stipulate ($1.5B as of Nov. 30, 2011) and may also include a little other costs, heading CSC to reduce the formerly supposing mercantile year 2012 guidance.
Analysts are also of the perspective that issues other than the NHS stipulate may poise a estimable plea to CSC. These include the Audit Committee review in to CSC’s accounting practices instituted in May 2011, which will lead to poignant authorised and accounting costs.
Secondly, the association is also caught with a category movement authorised case by mixed shareholders who lay violations of bonds laws in tie with commercial operation representation. A preference on the same emanate is pending, and may outcome in intensity waste if it goes opposite the company.
Magnitude of Estimate Revisions
The bulk of revisions is also estimable given CSC reported the second entertain results. Overall, estimates for the arriving entertain have left down from $1.17 to 57 cents in the final 90 days.
For mercantile 2012, estimates have decreased to $3.68 from $4.30 in the final 90 days. Moreover, for mercantile 2013, the estimates have left down from $4.62 to $3.71 over the same period.
Recommendation
We are distressed about the heated foe in the IT and clouded cover computing space from both large and tiny players such as Accenture (NYSE:ACN – News) and Hewlett-Packard Company (NYSE:HPQ – News). Moreover, with supervision orders approaching to dry up to a certain border and the NHS complaint persisting, slow authorised issues are also creation it formidable for Computer Sciences.
Moreover, the direct for the company’s products in Europe is not enlivening for the arriving quarters.
The association has a Zacks #5 Rank, implying a short-term Strong-Sell rating.
Read the Full Research Report on CSC
Read the Full Research Report on ACN
Read the Full Research Report on HPQ
More From Zacks.com