Back to top

Analyst Blog

Computer Sciences Corporation (CSC - Analyst Report) is set to report first-quarter 2015 results on Aug 7. Last quarter, the company posted a positive earnings surprise of 5.8%. 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 19.9%.

Let's see how things are shaping up for this announcement.

Growth Factors This Past Quarter

Computer Sciences posted mixed fourth-quarter fiscal 2014 results wherein the bottom line surpassed the Zacks Consensus Estimate but the top line lagged the same. Moreover, weak performances across all business segments resulted in a decline in revenues on a year-over-year basis.

Computer Sciences is adopting a cloud-based model and re-engaging the salesforce in a more efficient way. We believe that this along with its cost rationalization initiatives will enable margin expansion. Moreover, share buybacks are expected to support the bottom line.

Recently, Computer Sciences strengthened its position in the cloud cybersecurity service market by expanding its portfolio. The expanded offerings include cloud-based solutions, which will provide users a secure and flexible network. We believe that the expansion will enhance Computer Sciences’ existing portfolio of cyber security products.

Furthermore, the company’s traction in the cloud and partnerships with HCL, AT&T, VMware, Amazon.com and Microsoft are expected to drive growth, going forward.

However, the market is becoming competitive with companies like CACI International Inc. and Accenture making their presence felt. Delay in the government’s order renewal process and constricted federal spending are the near-term headwinds for the company.

Earnings Whispers?

Our proven model does not conclusively show that Computer Sciences will beat earnings this quarter. That 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 94 cents. Hence, the difference is 0.00%.

Zacks Rank: Computer Sciences has a Zacks Rank #4 (Sell). We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
.
Other Stocks to Consider

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

  • NVIDIA Corp. (NVDA - Analyst Report) has an Earnings ESP of +5.26% and holds a Zacks Rank #2 (Buy)
  • Cognex Corp. (CGNX - Snapshot Report) has an Earnings ESP of +12.00% and a Zacks Rank #2
  • Windstream Holdings, Inc. (WIN - Analyst Report) has an Earnings ESP of +12.50% and a Zacks Rank #2

Please login to Zacks.com or register to post a comment.