Computer Sciences Corporation (CSC): A Cheap Cloud Play

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September 24, 2013 10:33am NYSE:FNDB NYSE:FNDX

evilcomputer: Based on what has been described as maniacal cost-cutting and restructuring, Computer Sciences Corporation(NYSE:CSC) has run up 57% in one year and could gain another 25% in just the next year. The company is slashing


corporate overhead, cutting management layers and consolidating functions like human resources and purchasing.

The cost-cutting efforts were estimated to be in the $1 billion to $1.2 billion range, but that was recently raised to $1.3 billion.

They are refocusing their business around cloud computing, cybersecurity and big data to rekindle sales growth. This change would require very little additional cash, and analysts feel free cash flow could rise to 100% of earnings.

And the members of the new management team – CEO Mike Lawrie and CFO Paul Saleh – each have long histories of selling dud assets to increase shareholder value and have had great turnaround successes at Honeywell and Gannett.

Earnings are expected to run up 26% this year and 23% for the next two years on a 3% increase in sales.

And the company was recently ranked second, right behind the cloud leader Amazon, in completeness of vision and ability to execute.

The forward P/E is only 12.45 compared to an industry average of around 17, and earnings are expected to jump 15.25% next year.

Computer Sciences is a leaner, more cloud- and data security-focused company whose future earnings and new innovative style will drive this stock.

This is one you have to watch

by Steve McDonald, Bond Strategist, The Oxford Club

Investment U provides cutting-edge research and strategic financial recommendations for all levels of investors through its morning publication Investment U Daily and its related publications.

Computer Sciences Corporation provides consulting and information technology (IT) services to industry and government. The Company provides consulting systems design and integration IT and business process outsourcing applications software and Web and application hosting. Computer Sciences operates locations around the world.

MARKET CAP 7775788363
SECTOR Technology
INDUSTRY EDP Services

 


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