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Computer Sciences (CSC) Q3 Earnings: Will it Disappoint?

Zacks Equity Research

Computer Sciences Corporation CSC is set to report fiscal third-quarter fiscal 2017 results on Feb 2. Last quarter, the company posted a positive earnings surprise of 27.08%. Notably, the stock has surpassed the Zacks Consensus Estimate in the trailing four quarters with an average positive surprise of 13.78%.

Let us see how things are shaping up for this announcement.

Factors to Consider

Computer Sciences is one of the leading players in the information technology services industry. The ongoing merger proceedings with Hewlett Packard Enterprise Company’s (HPE) Enterprise Services business will open new avenues of growth for Computer Sciences and will help it to become a leading player in the IT services domain. The company’s other acquisitions like UXC and Xchanging further strengthened its product portfolio.

Benefits from the aforementioned strategic acquisitions will however come in the long run. Computer Sciences’ third quarter results are likely to bear the effect of the integration of the acquired businesses. Moreover, costs associated with these buyouts are likely to undermine the company’s bottom-line results.

Apart from this, increased competition, delay in government’s order renewal process and constricted federal spending may negatively impact its results in the third quarter.

Earnings Whispers

Our proven model does not conclusively show that Computer Sciences is likely to beat the Zacks Consensus Estimate in its upcoming release. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP: The Earnings ESP for Computer Sciences is -5.63%. This is because the Most Accurate estimate stands at 67 cents while the Zacks Consensus Estimate stand is pegged higher at 71 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Computer Sciences has a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Computer Sciences Corporation Price and EPS Surprise

Computer Sciences Corporation Price and EPS Surprise | Computer Sciences Corporation Quote

Stocks to Consider

Here are some companies which, as per our model, have the right combination of elements to post an earnings beat this quarter:

CEVA Inc. CEVA, with an Earnings ESP of +9.52% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Twilio Inc. TWLO, with an Earnings ESP of +8.33% and a Zacks Rank #3.

Pandora Media Inc. P, with an Earnings ESP of +8.11% and a Zacks Rank #3.

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Computer Sciences Corporation (CSC): Free Stock Analysis Report
 
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