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Unisys (UIS) Up 2.9% Since Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Unisys Corporation (UIS - Free Report) . Shares have added about 2.9% in that time frame, underperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Unisys Q4 Earnings Beat, Misses Revenues Lag

Unisys reported mixed fourth-quarter and full-year 2016 results. The company is poised to grow on the back of improved cost structure and increased free cash flow generation.

Inside the Headlines

Quarterly non-GAAP earnings came in at $0.60 per share, surpassing the Zacks Consensus Estimate of $0.55. However, the bottom line fell short of the year-ago tally of $1.58 per share.

The company reported a GAAP loss of $0.02 per share, as against the earnings of $0.02 recorded in the year-ago period.

For full-year 2016, non-GAAP earnings came in at $2.03 per share versus $2.26 per share reported in the prior-year period. Meanwhile, GAAP loss was $0.95 per share for 2016, narrower than the loss of $2.20 per share recorded in the year-ago period.

Quarterly revenues were $721.7 million, lower than the Zacks Consensus Estimate of $734 million. The top line also fell short of the prior-year tally of $789.9 million.

For full-year 2016, Unisys generated revenues worth $2,820.7 million, down 6.4% year over year.

Segmental Performance

During the quarter, revenues of the company’s Services segment were 596.5 million, down 8.1% year over year.

Revenues of Technology segment summed $125.2 million, down 11.1% year over year.

Margins

The company’s quarterly cost of sales was $561.5 million, down 11% year over year. Selling general and administrative expenses came in at $109.8 million versus $130 million in the year-ago quarter. Operating margin expanded 290 basis points (bps) to 4.9%.   

Balance Sheet/Cash Flow

In Dec 31, 2016, cash and cash equivalents came in at $370.6 million versus $365.2 million recorded at the end of 2015. Long-term debt was $194 million as against $233.7 million recorded in Dec 31, 2015.

Exiting fourth-quarter 2016, the company generated cash worth $218.2 million from operating activities versus $1.2 million recorded in the year-ago period. Adjusted free cash flow was at $117 million, flat year over year. The company’s capital expenditure was $32.5 million in fourth-quarter 2016, down from $49.6 million in the prior-year quarter.

Outlook

Unisys intends to boost its near-term top and bottom lines on the back of disciplined financial focus, appropriate implementation of ongoing vertical go-to-market strategy and unique product offerings. Notably, during the reported quarter, the company inked several contracts. All these deals would likely fortify its business in the quarters ahead.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.

Unisys Corporation Price and Consensus

 

Unisys Corporation Price and Consensus | Unisys Corporation Quote

VGM Scores

At this time, Unisys' stock has a great Growth Score of 'A', though it is lagging a bit momentum front with 'B'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% 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.

The company's stock is more suitable for growth and value than momentum, based on our styles scores.

Outlook

The stock has a Zacks Rank #2 (Buy). We are looking for a above average return from the stock in the next few months.




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