Computer Sciences Corporation (CSC): Buy This Hidden Gem

Share Purchases Raise Shareholder Value

Computer Sciences bought back 4.7 million shares for $228 million in the last quarter, and a total of $305 million (or 6.7 million shares) in shares last fiscal year. The average price of the buyback was $45.47. By comparison, HP bought back $797 million, and has another $8.1 billion remaining in authorized share repurchasing.

Foolish Bottom Line

Computer Sciences is the least followed of the services companies mentioned. The average trading volume is only 1.5 million shares, compared to 9 million and 23 million for Xerox and HP, respectively. All three companies have similar price-to-sales ratios, but Computer Sciences is the smallest of the three by market cap. One negative is that Computer Sciences offers the lowest dividend yield:

NAME	MKT CAP	AVG VOL	YIELD	PRICE/SALES	EBITDA
Hewlett-Packard	46.85B	23,418,700	2.4	0.42	13.92B
Xerox Corp.	10.95B	9,198,490	2.6	0.49	3.00B
Computer Sciences	6.50B	1,518,310	1.8	0.44	2.00B

Data Source: Yahoo Finance

One risk is that expectations remain high for Computer Sciences, since its forward P/E is relatively higher:

CSC Forward PE Ratio data by YCharts

The sharp drop for Computer Sciences Corporation (NYSE:CSC) gives investors a chance to build up a position in the company. Xerox and HP are both attractive too, given their play as companies in transition. Computer Sciences differs in that its business model is solid, and there is a healthy backlog to cushion any unexpected drop in orders.

The article Buy This Hidden Gem originally appeared on Fool.com and is written by Chris Lau.

Chris Lau has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Chris is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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