It has been about a month since the last earnings report for Unisys (UIS). Shares have added about 25.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Unisys due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Unisys' Q2 Earnings and Revenues Surpass Estimates
Unisys reported a solid second-quarter of 2018, wherein both the top line and bottom line beat the Zacks Consensus Estimate.
The company's revenues and earnings per share (EPS) came in at $667.4 million and 39 cents respectively, topping the Zacks Consensus Estimate of revenues of $661 million and EPS of 27 cents. In the year-ago quarter, Unisys had posted revenues of $666.2 million and earnings per share of 6 cents.
Adjusted EBITDA surged 46% from prior-year quarter to $99 million. Quarter in Detail
The Services segment generated revenues of $586.7 million, up 2.1% from the prior-year quarter, constituting 88% of the total quarterly revenues. Services backlog increased 27% year over year to $4.6 billion.
Unisys' continued focus on increasing the efficiency of its Services delivery engine through increased automation and artificial intelligence is reflected in the quarterly performance of the Services segment.
Technology segment's revenues were $80.7 million, down 11.7% from the year-earlier quarter.
In the reported quarter, the company launched Unisys InteliServe, a user-centric service desk platform, as well as Unisys CloudForte, a platform to accelerate digital transformation of clients.
Also, during the second quarter, Unisys successfully incorporated a Stealth solution for an U.S federal national security agency to provide improved biometric identity management capabilities. Operating Metrics
Non-GAAP operating profit for the reported quarter was $55.6 million compared with $26 million in the prior-year quarter.
Non-GAAP operating profit margin was 8.3%, up 440 basis points year over year. Balance Sheet and Cash Flow
As of Jun 30, 2018, Unisys had $584.3 million in cash and cash equivalents compared with $656.4 million in the previous quarter.
Long-term debt (excluding current maturities) was $638.1 million compared with $636.2 million witnessed at the end of previous quarter.
During the quarter, the company used $11.7 million of cash for operational activities. Adjusted free cash outflow for the quarter was $4.6 million. Outlook
The company reaffirmed its outlook for fiscal 2018. The company expects non-GAAP revenues of $2.7-$2.83 billion in the fiscal. Non-GAAP operating margin is expected in the range of 7.8-8.8%. Adjusted EBITDA margin is projected to be 13.7-14.9%.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a downward path over the past two months.
Currently, Unisys has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is primarily suitable for value investors while also being suitable for those looking for momentum and to a lesser degree growth.
Unisys has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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