Computer Sciences Corp.
) raised its EPS outlook for fiscal 2013 during its strong fiscal
second quarter report earlier this month, sending shares toward its
52-week high. This Zacks #1 Rank (Strong Buy) provider of IT
services has jumped 54.1% year-to-date.
Cost Control Drives Strong Q2
On November 6, Computer Sciences reported fiscal second quarter
earnings per share (EPS) of 83 cents, crushing the Zacks Consensus
Estimate of 47 cents by 76.6%.
Net sales decreased 2.8% from last year to $3.85 billion, due
mainly to soft performances across the three operating segments.
Despite the weak revenue performance, Computer Sciences managed to
beat expectations on the back of massive cost control efforts and
better comps, as a huge goodwill impairment charge was recorded in
the year-ago quarter.
Upbeat Fiscal 2013 Guidance
For fiscal 2013, management is targeting $500 million to $600
million in cost reductions through improvements in contract
management, supply chain and procurement, workforce optimization,
and real estate consolidations, partially offset by reinvestments.
Considering that its turnaround activities are running ahead of its
schedule, management raised its EPS target to between $2.30 and
$2.50 from the earlier guidance of $2.10 to $2.30.
Earnings Estimate Revision
The Zacks Consensus Estimate for fiscal 2013 has increased 16.1%
over the past 30 days to $2.52 per share, while the Zacks Consensus
Estimate for fiscal 2014 shot up 17.3% to $3.33. The estimates for
fiscal 2013 and fiscal 2014 reflect year-over-year earnings
increases of 26.0% and 32.1%, respectively.
Computer Sciences shares have appreciated 38.4% in the past 6
months compared to a mere 5.5% increase for the S&P 500. The
significant increase in stock price is on account of its strong
growth potential. The stock is currently trading above its 50 day
and 200 day moving averages of 33.31 and 29.24, respectively.
Trading volumes are lower than its peer group.
Falls Church, Virginia-based Computer Sciences Corporation was
founded in 1959. The company is a leading provider of information
technology outsourcing, consulting and systems integration
services, and other professional services. It specializes in IT
systems consulting - designing, developing, implementing, and
integrating information systems. The company also provides business
process outsourcing (BPO) services and manages key functions for
clients, such as procurement and supply chain, call centers and
customer relationship management, credit services, claims
processing and logistics. The company also licenses software
systems for the financial services markets and provides various
end-to-end business solutions to commercial and government clients.
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