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Computer Sciences Corp. (CSC - Analyst Report) 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.

6-Months Chart

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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