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Unisys (UIS) to Report Q1 Earnings: What's in the Cards?

Zacks Equity Research

Unisys UIS is scheduled to report first-quarter 2019 results on May 2.

Notably, the company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, the average positive surprise being 83.79%.

In the last reported quarter, the company’s non-GAAP earnings per share of 97 cents topped the Zacks Consensus Estimate of 66 cents but lagged the prior-year figure of $1.75.

Revenues of $760.9 million inched up 2.2% from the year-ago quarter and also surpassed the consensus estimate of $752 million.

For first-quarter 2019, the Zacks Consensus Estimate for revenues is pegged at $660.2 million, indicating nearly a 6.8% decline from the year-ago reported figure.

The Zacks Consensus Estimate for earnings stands at 30 cents, which is 51.6% lower than the number reported in the year-earlier period.

Let’s see how things are shaping up for the upcoming announcement.

Factors to Consider

Unisys is banking on its Services segment to boost performance in the upcoming quarterly results. Its focus on increasing the efficiency of its services delivery engine is a positive.

Growth in the company’s U.S. federal and commercial sectors coupled with an uptick in new managed services contracts within the public sector, is a tailwind for the company.

The company’s results are also likely to be driven by the expanding Stealth portfolio. Moreover, the availability of CloudForte for Microsoft MSFT Azure and Amazon Web Services is likely to drive client wins.

However, renewal of large contracts during the third and the fourth quarter of 2018 is an overhang on the company’s first-quarter 2019 results, which per management, would be the weakest quarter of this year.

The signing of the big deal, which drove significant year-over-year growth in TCV during the last reported quarter, is not expected to be repeated in the upcoming quarterly results. This makes us anxious all the more.

Further, new business wins are likely to persistently weigh on the margins of the Service segment, which is another woe.

Unisys Corporation Price and EPS Surprise

Unisys Corporation Price and EPS Surprise | Unisys Corporation Quote

What the Model Says

The proven Zacks model clearly shows that a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has significantly higher chances of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Unisys has a Zacks Rank #3, which increases the predictive power of ESP. However, a 0.00% ESP in the combination makes surprise prediction difficult for the stock this earnings season.

Stocks That Warrant a Look

Here are a couple of stocks worth considering as per our model, these have the right mix of elements to beat on earnings this reporting cycle:

Paycom Software, Inc. PAYC has an Earnings ESP of +3.17% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here .

Square, Inc. SQ has an Earnings ESP of +5.50% and is a Zacks #2 Ranked player.

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