NEW YORK (TheStreet) -- Computer Sciences Corp. (CSC) stock is declining 55.35% to $30.64 on heavy trading volume on Monday after the information technology provider completed the separation of CSRA, which focuses on clients in the U.S. government.
On May 19, the company announced it will divide its U.S. public sector unit from its global commercial and government businesses.
CSRA stock began trading on the New York Stock Exchange today and is rising 5.82% to $30.91 in afternoon trading.
"A little more than six months ago, CSC's board of directors determined that two leading pure-play companies, focused exclusively on their respective customer segments, would best serve the interests of our clients, employees and other stakeholders," Computer Sciences CEO and CSRA Chairman Mike Lawrie said in a statement.
Computer Sciences shareholders received one CSRA common share for every share they held as of November 18.
The companies paid a special cash dividend today as well, with Computer Sciences paying $2.25 per share and CSRA paying $8.25 per share.
Additionally, CSRA completed the merger of SRA International, which was acquired for $390 million in cash and 25 million CSRA shares from Providence Equity Partners and part of SRA's management.
So far today, 7.16 million shares of Computer Sciences have exchanged hands, compared with its average daily volume of 1.41 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 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, 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