NEW YORK (TheStreet) -- Computer Sciences (CSC) shares are continuing to rise 0.59% to $69.87 on heavy volume Friday after the IT-services provider announced late Tuesday that it will acquire Australian IT services company UXC Limited for about $308 million.
CSC will buy UXC for $1.22 Australian per share, and UXC will pay a franked dividend of 2 cents Australian per share for the half year ending December 3, 2015, the companies said.
The deal is expected to close in February of 2016.
"The addition of UXC would continue the process of rebalancing our offering portfolio and strengthening our global commercial business," Computer Sciences CEO Mike Lawrie stated.
As of 11:07 a.m., more than 4 million shares had changed hands, well above Computer Sciences' average trading volume of about 1.3 million shares.
Separately, TheStreet Ratings team rates COMPUTER SCIENCES CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
We rate COMPUTER SCIENCES CORP (CSC) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, solid stock price performance, growth in earnings per share and increase in net income. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is somewhat low, currently at 0.87, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.17, which illustrates the ability to avoid short-term cash problems.
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- Despite the weak revenue results, CSC has outperformed against the industry average of 27.0%. Since the same quarter one year prior, revenues fell by 11.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- COMPUTER SCIENCES CORP reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, COMPUTER SCIENCES CORP reported lower earnings of $0.04 versus $5.71 in the prior year. This year, the market expects an improvement in earnings ($4.93 versus $0.04).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the IT Services industry average, but is greater than that of the S&P 500. The net income increased by 10.6% when compared to the same quarter one year prior, going from $151.00 million to $167.00 million.
- You can view the full analysis from the report here: CSC