Unisys (UIS) To Report Q2 Earnings: What's In The Offing?

Unisys (NYSE:UIS) is scheduled to report second-quarter 2019 results on Jul 30.

Notably, the company’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed it in two, the average positive surprise being 7.44%.

In the last reported quarter, the company’s non-GAAP earnings per share of 15 cents missed the Zacks Consensus Estimate of 28 cents, and was lower than the prior-year figure of 19 cents.

Revenues of $695.8 million inched up 2.3% in constant currency year over year, and also surpassed the consensus estimate of $644 million.

For second-quarter 2019, the Zacks Consensus Estimate for revenues is pegged at $661.3 million, indicating a 0.91% decline from the year-ago reported figure.

The consensus estimate for earnings stands at 19 cents, which is 51.28% lower than the number reported a year ago.

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

Factors to Consider

Unisys expects second-quarter results to benefit from its solid Services segment. Its focus on increasing 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. A number of large public sector deals signed last year has started to generate revenues, and this trend is likely to boost revenues this earnings season.

Further, increasing Internet penetration in emerging markets, rising IT-infrastructure spending particularly across Asia-Pacific, and focus of IT services companies on providing hybrid solutions may reflect positively in Unisys second-quarter results.

The company’s results are also likely to be driven by the expanding Stealth portfolio, which brought in 300% more revenues year over year in the last reported quarter. Moreover, in the first quarter, Unisys launched Stealth 4.0, which has already been integrated with security platforms of key companies like Palo Alto’s (NYSE:PANW) Panorama network security management platform, and Dell’s (NYSE:DELL) Cyber Recovery software. This makes us optimistic about the upcoming results.

Additionally, the availability of CloudForte for Microsoft (NASDAQ:MSFT) Azure and Amazon (NASDAQ:AMZN) Web Services is likely to drive client wins. Notably, in May this year, Unisys announced the availability of CloudForte for hybrid cloud environments, which will complement CloudForte solutions that it has launched for AWS and Azure on the cloud environment.

However, new business wins are likely to weigh on margins of the Service segment.

Moreover, the company continues to invest in its ClearPath Forward operating system software to improve its renewal rate with existing clients in its Technology business. This is expected to add to the margin woes for the to-be-reported quarter.

Unisys currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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