Why Unisys Shares Soared
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of IT services specialist Unisys (NYS: UIS) surged 20% today after the company's quarterly results breezed past Wall Street expectations.
So what: The shares have suffered in recent months on concerns over the sharp drop in spending by the federal government, but today's results -- first-quarter EPS of $0.30 versus a year-ago loss of $0.90 -- suggest that management is doing a great job in dealing with it. Strong growth in other segments seems to be offsetting much of the softness in its government segment, reigniting hopes of a big bounce in the stock.
Now what: Unisys should keep trending positively in the short run. "We have grown revenue year over year for two of the last three quarters despite softness in our U.S. Federal government business," Chairman and CEO Ed Coleman said. "We are focused on continuing our progress in 2012 as we work toward achieving our strategic and financial objectives." But while today's results will certainly give swing traders a tempting turnaround idea, Unisys' extremely volatile shares and lack of a durable competitive edge -- in an industry filled with gorillas -- continue to make it a questionable long-term pick.
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At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.