NEW YORK (TheStreet) -- Shares of Computer Sciences Corp (CSC) jumped in late afternoon trading, and closed up 5.28% to $59.62 today after the company showed interest in a leveraged buyout, Bloomberg reports.
The technology consultant company is in talks with private-equity firms including Blackstone Group (BX) and Bain Capital to gauge their interests, Bloomberg added.
"We rate COMPUTER SCIENCES CORP (CSC) a BUY. This is driven by a few notable 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, reasonable valuation levels, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is somewhat low, currently at 0.72, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, CSC has a quick ratio of 1.52, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has increased to $273.00 million or 28.16% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -1.83%.
- 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 increased its bottom line by earning $4.13 versus $3.07 in the prior year. This year, the market expects an improvement in earnings ($4.53 versus $4.13).
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full analysis from the report here: CSC Ratings Report