Computer Sciences stock takes a beating after fourth-quarter earnings are released.

Computer Sciences stock takes a beating after fourth-quarter earnings are released

Although Computer Sciences Corp. has reported better-than-expected earnings and analysts have been very bullish about its stock, its price continued to take a beating following a recent earnings announcement.

Compared to the same period last year, the El Segundo-based computer services company reported fourth-quarter earnings 17 percent higher -- $18.7 million, or $1.16 a share -- on 16 percent higher revenues of $417.8 million.

After the quarterly earnings announcement the stock dropped $1 to $43.125 a share, down from levels of $51 a share in January. At that time the price garnered "buy" recommendations from analysts.

"The stock got whacked from late March to late April, when it fell from $49.50 to $40.50," said David A. Henwood, an analyst with Raymond James of St. Petersburg, Fla. "Over the last 10 days, the stock actually rallied. At $40.50 we went for an `aggressive buy' and we retain that position. We see the stock as selling at a three-year low."

Last week, the price did recover somewhat to the $45 level.

Computer Sciences has continued to reduce its dependence on federal government contracts and has established itself as a private consultant, said Henwood. It has seen a 109 percent growth in its consulting areas.

This growth was part of an acquisitions plan established three years ago by President and Chairman William Hoover. The company after this year should meet its goal of reducing its federal contracts percentage from 75 percent to 60 percent, said Henwood, and change investors' perception that "it's just a federal company."

Computer Sciences -- whose main business is systems integration, or linking computers, software and communications into one network -- is also somewhat immune to the current computer products slump because it keeps multi-year contracts, Henwood said.