Computer Sciences Corp Earnings: Net Income Falls, But Stocks POPS 17.5%

S&P 500 (NYSE:SPY) component Computer Sciences Corporation (NYSE:CSC) reported its results for the first quarter. Computer Sciences Corporation offers information technology and professional services to commercial and government markets, specializing in the application of complex IT problems.

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Computer Sciences Corporation Earnings Cheat Sheet

Results: Net income for Computer Sciences Corporation fell to $42 million (26 cents per share) vs. $183 million ($1.17 per share) a year earlier. This is a decline of 77% from the year-earlier quarter.

Revenue: Fell 1.9% to $3.96 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Computer Sciences Corporation beat the mean analyst estimate of 21 cents per share. It fell short of the average revenue estimate of $4.1 billion.

Quoting Management: “Our first quarter performance reflects a first step in turning around CSC. While there is significant work ahead of us, I am pleased with our initial progress on operating margins and free cash flow,” said Mike Lawrie, President and CEO. “We have launched several action plans which will transform the company over the next several years and create value for our shareholders. As part of this transformation agenda, we are bringing a much needed focus to greater contract management discipline across the company. We are also simplifying our operating model to realize greater productivity and operational efficiency. We are attacking our cost structure and we expect to realize about $1 billion in cost improvement over the next 18 months.”

Key Stats:

The company’s profit in the latest quarter follows losses in the three previous quarters. The company reported a net loss of $158 million in the fourth quarter of the last fiscal year, a loss of $1.39 billion in the third quarter of the last fiscal year and a loss of $2.88 billion in the second of the last fiscal year.

The company topped expectations last quarter after falling short of forecasts in the fourth quarter of the last fiscal year with a loss of 14 cents versus a mean estimate of net income of 20 cents per share.

Gross margins widened last quarter, growing 1.2 percentage points from the year-earlier quarter to 17.8%. This breaks a streak of two consecutive quarters of shrinking margins.

Over the last five quarters, revenue has fallen an average of 1.2% year-over-year. The biggest drop came in the third quarter of the last fiscal year, when revenue fell 6.1% from the year-earlier quarter.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the second quarter has moved down from 55 cents a share to 42 cents over the last ninety days. The average estimate for the fiscal year is $1.91 per share, down from $2.80 ninety days ago.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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