Will Unisys' DWS Bookings be Able to Offset Discretionary Weakness?

Core Insights - Unisys Corporation (UIS) is experiencing strong bookings in its Digital Workplace Solutions (DWS) segment, driven by a market shift towards AI-driven solutions [1] - The company is focusing on innovations that meet client needs in cost optimization, data integration, security, productivity, and AI enablement [1] Group 1: Digital Workplace Solutions (DWS) - Since 2024, UIS has been developing a significant pipeline for its Device Subscription Service (DSS), which is expected to create value by reducing costs and enhancing efficiency [2] - In Q1 2025, UIS secured scalable DSS signings, including a major deal with a global tech supplier for 380,000 devices across 14 countries, enhancing long-term revenue visibility [3] - Despite a 7.5% year-over-year revenue decline in the DWS segment due to weak discretionary spending, UIS anticipates recovery in the second half of 2025 as DSS signings increase [4] Group 2: Market Performance and Valuation - UIS shares have increased by 6.5% over the past three months, underperforming compared to the Zacks Computers - IT Services industry and the S&P 500 index [5] - UIS is trading at a forward price-to-sales (P/S) ratio of 0.14, indicating a discounted valuation compared to peers, which may present an attractive entry point for investors [10] - Competitors Wipro and DXC Technology have forward P/S ratios of 2.86 and 0.22, respectively, highlighting UIS's relative valuation advantage [11] Group 3: Earnings Estimates - Earnings estimates for UIS for 2025 and 2026 suggest year-over-year growth of 28.9% and 120.7%, respectively, indicating strong long-term growth potential [12] - The current earnings estimates for 2025 and 2026 remain unchanged, reflecting stability in the company's growth trajectory [12]