Should You Buy, Sell, or Hold Unisys Stock Before Q2 Earnings?

Core Viewpoint - Unisys Corporation (UIS) is expected to report a significant decline in earnings for the second quarter of 2025, with a projected loss of 34 cents per share, compared to a profit of 16 cents in the same quarter last year, indicating a 312.5% decrease in EPS [1][5]. Financial Performance - The consensus estimate for second-quarter revenues is $442.5 million, reflecting a 7.5% decrease from the previous year's figure [5][8]. - UIS has a history of earnings surprises, having outperformed the Zacks Consensus Estimate in three of the last four quarters, with an average surprise of 46.9% [5]. Revenue Drivers - Growth in Device Subscription Services (DSS), AI-led solutions, and enterprise storage is anticipated to contribute to sequential revenue gains [8][10]. - UIS projects approximately $375 million in Ex-L&S revenues, indicating mid-single-digit sequential growth [11]. - Strength in multi-year infrastructure contracts and increased demand for PC refreshes, driven by Windows 11 and AI compatibility, are expected to support performance [12][13]. Challenges - Timing-related headwinds from license and support renewals and softness in discretionary public sector projects may hinder revenue growth [14]. - Labor and training costs associated with ramping up operations may exert pressure on margins [15]. Stock Performance and Valuation - UIS shares have increased by 9.3% over the past three months, outperforming the Zacks Computers - IT Services industry, which grew by 3.6% [16]. - The stock is currently trading at a forward price-to-sales (P/S) multiple of 0.15X, significantly below the industry average of 18.58X [19]. Strategic Positioning - UIS is focusing on expanding its presence in high-growth areas such as digital workplace services, cybersecurity, and AI-enabled solutions [21]. - The company is experiencing strong momentum in new business signings, particularly in high-volume DSS contracts [21]. Outlook - While UIS is making progress in high-growth segments, short-term pressures from license renewal timing and cautious public sector spending may impact margins and revenue momentum [24]. - The near-term earnings trajectory appears uncertain, with projected year-over-year EPS decline and modest revenue contraction [25].