Computer Sciences (CSC) Q3 Earnings: What to Expect?

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Computer Sciences Corporation  CSC is set to report fiscal third-quarter 2016 results on Feb 9. Last quarter, the company posted a positive earnings surprise of 9.6%. Moreover, it is worth noting that Computer Sciences has outperformed the Zacks Consensus Estimate in all the four preceding quarters with an average positive surprise of 7.5%.

Let us see how things are shaping up for this announcement.

 Factors to Consider

Computer Sciences Corporation is one of the leading players in the information technology services industry. The company reported mixed second-quarter results wherein the bottom line beat the Zacks Consensus Estimate but the top line missed the same. The company retained its fiscal 2016 earnings outlook.

We believe that despite the company's revenues being down on a year-over-year basis, the shift toward higher margin offerings will be beneficial. The company's traction in the cloud and partnerships with HCL, AT&T T , VMware and Microsoft are expected to drive growth.

Moreover, the company's continuous share buybacks and dividend payments are expected to support earnings and boost investors' confidence.

However, the market is becoming competitive with companies like CACI International Inc. and Accenture making their presence felt. Delay in government's order renewal process and constricted federal spending are the near-term headwinds. Moreover, tepid overall bookings remain a cause of concern.

Earnings Whispers?

Our proven model does not conclusively show that Computer Sciences will beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP:  Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 69 cents. Hence, the difference is 0.00%.

Zacks Rank:  Computer Sciences' Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks to Consider

Here are some companies, which you may consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

AMN Healthcare Services, Inc. AHS has an Earnings ESP of +2.44% and holds a Zacks Rank #1 (Strong Buy)

Agilent Technologies Inc. A has an Earnings ESP of +2.33% and a Zacks Rank #3

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AT&T INC (T): Free Stock Analysis Report

COMP SCIENCE (CSC): Free Stock Analysis Report

AGILENT TECH (A): Free Stock Analysis Report

AMN HLTHCR SVCS (AHS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Business , Investing , Earnings , Stocks
Referenced Symbols: T , A ,

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