Computer Sciences Corporation (CSC) is expected to report third-quarter fiscal 2015 results on Jan 29. Last quarter, the company posted a positive earnings surprise of 16.83%. Moreover, Computer Sciences has outperformed the Zacks Consensus Estimate in all the four trailing quarters with an average positive surprise of 12.58%. Let's see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Computer Sciences is likely to beat earnings estimates because it has the right combination of two key ingredients.
Zacks ESP: Computer Sciences currently has an Earnings ESP of +0.89%. This is because the Most Accurate estimate of $1.13 per share is pegged higher than the Zacks Consensus Estimate of $1.12.
Zacks Rank: Computer Sciences carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings estimates. Conversely, the Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
The combination of Computer Sciences’ Zacks Rank #3 and Earnings ESP of +2.94% make us confident of a positive earnings beat.
What is Driving the Better-than-Expected Earnings?
Computer Sciences Corporation is one of the leading players in the information technology services industry. We believe the company’s adoption of a cloud-based model and re-engagement of the sales force will drive growth. Moreover, cost rationalization initiatives will have a positive impact on the fourth-quarter margins, in our view. The company’s traction in the cloud cyber security service market also bodes well. Furthermore, the company’s continuous share buybacks are expected to support earnings in the to-be-reported quarter.
Other Stocks to Consider
Computer Sciences is not the only firm looking up this earnings season. We also see likely earnings beats coming from the following technology sector peers:
Hutchinson Technology Inc. (HTCH), with an Earnings ESP of +7.69% and a Zacks Rank #2 (Buy).
Cognizant Technology Solutions Corporation (CTSH), with an Earnings ESP of +1.69% and a Zacks Rank #2.
Automatic Data Processing Inc. (ADP), with an Earnings ESP of +1.47% and a Zacks Rank #3.
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