Computer Sciences Corporation (NYSE: CSC), reported results for the fourth quarter of fiscal year 2016.

“In fiscal 2016, CSC took transformative steps forward in our strategy of delivering next-generation capabilities to our customers globally” said Mike Lawrie, chairman, president and CEO. “Following the successful separation of our federal public sector business, we acquired UXC and Xchanging, two leaders in enterprise applications and insurance solutions, respectively.  As we continue to invest in our offerings, we reported solid profitability and earnings growth in fiscal 2016, and are well positioned to deliver revenue growth and margin expansion in the coming year.”

Financial Highlights

Financial Highlights – Fourth Quarter Fiscal 2016

  • Earnings per share from continuing operations was $(0.73) in the fourth quarter, compared with $(0.93) in the fourth quarter of fiscal 2015, and includes:
  • $(0.46) from separation, restructuring and other transaction costs
  • $(0.68) pension & OPEB actuarial and settlement impacts
  • $(0.43) in debt extinguishment costs, and
  • $0.10 related to the adoption of ASU 2016-09.
    • Non-GAAP diluted earnings per share was $0.73 excluding these items, compared with $0.71 in the fourth quarter of fiscal 2015.
    • (Loss) income from continuing operations was $(101) million in the fourth quarter, compared with $(131) million in the fourth quarter of fiscal 2015, and includes:
    • $(64) million from separation, restructuring and other transaction costs
    • $(94) million of pension & OPEB actuarial and settlement impacts
    • $(60) million in debt extinguishment costs, and
    • $14 million related to the adoption of ASU 2016-09.
      • Non-GAAP income from continuing operations was $103 million excluding these items, compared with $102 million in the year-ago quarter.
      • (Loss) income from continuing operations, before taxes of $(187) million includes:
      • $(78) million from separation, restructuring and other transaction costs
      • $(118) million of pension & OPEB actuarial and settlement impacts
      • $(100) million in debt extinguishment costs.
        • Non-GAAP income from continuing operations, before taxes was $109 million excluding these items.
        • Adjusted operating income of $138 million compared with $196 million in the year-ago quarter. Adjusted operating margin of 7.6% decreased from 10.3% in the year-ago quarter.
        • Adjusted earnings before interest and taxes (EBIT) of $123 million compared with $151 million in the year-ago quarter.

Financial Highlights – Fiscal Year 2016

  • Earnings per share from continuing operations was $0.45 in fiscal year 2016, compared with $(1.52) in fiscal year 2015, and includes:
  • $(0.38) from certain CSRA overhead costs
  • $0.16 of U.S. Pension & OPEB impacts related to our separation from CSRA
  • $(0.85) of separation, restructuring & other transaction costs
  • $(0.57) of pension & OPEB actuarial & settlement losses
  • $(0.02) of SEC settlement-related items
  • $(0.42) in debt extinguishment costs
  • $0.03 of tax valuation allowance impacts.
    • Non-GAAP diluted earnings per share was $2.52 excluding these items, compared with $2.24 in fiscal year 2015.
    • Income (loss) from continuing operations was $65 million, compared with $(217) million in fiscal year 2015, and includes:
    • $(54) million million from certain CSRA overhead costs
    • $23 million of U.S. Pension & OPEB impacts related to our separation of CSRA
    • $(120) million of separation, restructuring & other transaction costs
    • $(81) million of pension & OPEB actuarial & settlement losses
    • $(3) million of SEC settlement-related items
    • $(60) million in debt extinguishment costs
    • $4 million of tax valuation allowance and adjustments impacts.
      • Non-GAAP income from continuing operations was $356 million excluding these items, compared with $326 million in fiscal year 2015.
      • Income (loss) from continuing operations, before taxes of $10 million includes:
      • $(88) million from certain CSRA overhead costs
      • $38 million of U.S. Pension & OPEB costs
      • $(161) million of separation, restructuring & other transaction costs
      • $(99) million of pension & OPEB actuarial & settlement losses
      • $(5) million of SEC settlement-related items, and
      • $(100) million in debt extinguishment costs.
        • Non-GAAP income from continuing operations, before taxes was $425 million excluding these items.
        • Adjusted operating income of $632 million compared with $687 million in fiscal year 2015. Adjusted operating margin of 8.9% increased from 8.5% in fiscal year 2015.
        • Adjusted earnings before interest and taxes (EBIT) of $503 million compared with $513 million in fiscal year 2015.
        • Net cash provided by operating activities was $802 million compared with $1,473 million in the prior year.
        • Fiscal 2016 free cash flow was $319 million versus $757 million in the prior year.

Global Business Services

GBS revenue of $941 million in the quarter compares with $980 million in the year-ago quarter, a decline of 1.1% year-over-year in constant currency. Growth in the BPS and Big Data businesses partially offset a decline in the Consulting business. GBS operating margin, excluding the impact of certain items, was 11.1%, down from 16.3% a year ago, reflecting incremental investments in our BPS and next-generation offerings. New business awards for GBS were $1.1 billion in the fourth quarter.

Global Infrastructure Services

GIS revenue of $866 million in the quarter compares with $930 million in the year-ago quarter, a decline of 3.7% year-over-year in constant currency. Growth in our next-generation offerings including Cloud and MyWorkStyle partially offset the moderating decline in the traditional outsourcing business. GIS operating margin, excluding the impact of certain items, was 6.0%, up from 5.8% a year ago. New business awards for GIS were $1.2 billion in the quarter.

Completion of UXC and Xchanging Acquisitions

During the fourth quarter, CSC completed the acquisition of UXC.  CSC subsequently also completed the acquisition of Xchanging in the first quarter of fiscal 2017.

Returning Capital to Shareholders

During the fourth quarter, CSC returned $65 million to shareholders consisting of $20 million in common stock dividends and $45 million of share repurchases. During the quarter, CSC repurchased 1.5 million shares at an average price of $30.08.

For fiscal year 2016, CSC returned $603 million to shareholders in the form of $430 million in common stock dividends and $173 million of share repurchases. During the year, CSC repurchased 3.8 million shares.

CSC had 138,384,835 basic shares outstanding on April 1, 2016. (Original Source)

Shares of Computer Sciences jumped nearly 35% to $48, as of this writing. CSC has a 1-year high of $71.15 and a 1-year low of $24.27. The stock’s 50-day moving average is $33.54 and its 200-day moving average is $34.23.

On the ratings front, CSC has been the subject of a number of recent research reports. In a report issued on May 19, Jefferies Co. analyst Jason Kupferberg reiterated a Buy rating on CSC, with a price target of $36, which represents a slight upside potential from current levels. Separately, on April 13, Wells Fargo’s Edward Caso reiterated a Hold rating on the stock .

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Jason Kupferberg and Edward Caso have a total average return of 10.9% and 1.0% respectively. Kupferberg has a success rate of 72.0% and is ranked #166 out of 3842 analysts, while Caso has a success rate of 70.0% and is ranked #2044.