) reached a new 52-week high of $27.58 on Friday, May 3, 2013
following the acquisition of Layer 7 technologies (Apr 2013).
The closing price of the memory-chip maker on May 3 was
$27.73, above its previous 52-week high of $27.58. This marked a
decent one-year return of about 15.1% and robust year-to-date
return of about 23.2%. Average volume of shares traded over the
last 30 days was 3.3 million.
CA delivered positive earnings surprises in the last four
quarters with an average beat of 6.9%. This Zacks Rank #3 (Hold)
company has a market cap of $12.7 billion and long-term expected
earnings growth rate of 10.0%.
3Q13 Earnings Summary
) reported third-quarter 2013 adjusted earnings per share (EPS)
of 61 cents, ahead of the Zacks Consensus Estimate of 57 cents.
Better cost management and decent Enterprise Business resulted in
CA generated cash flow from continuing operations of $566
million, up 43% on a reported basis. The improvement in cash flow
can be attributed to a $178.0 million increase in cash
collections, including a single installment payment of $150
Management is positive about the increase in business volume.
CA expects growth in non-GAAP earnings per share from continuing
operations in the range of 6.0%-10.0%, amounting to $2.36 to
$2.44 per share.
Layer 7 Acquistion
The acquisition of the API management company, Layer 7
technologies had positive impact on the business of the company.
This has been the second big acquisition in the API management
space for CA. This acquisition, would help the company securely
enable strategic cloud environment, and would also
accelerate service delivery which would in turn increase
profitability by generating more revenue from the existing
Recovery in Mainframe Business and Margin
CA is expected to benefit from the recovery in the Mainframe
segment in fiscal year 2014. Over the years, the growth in the
Mainframe market has had a significant impact on CA's results.
Moreover, during the Mainframe renewal process, the company
upgrades the customer to a higher value product, thereby
generating additional revenue for itself. Moreover, operating
margin for the Enterprise Solutions business is expected to be in
the range of 20%-plus in the coming year, relative to 8%-12%
margins the business segment has produced over the past two-plus
years. Moreover, the company is also taking cost reduction
measures in the Enterprise Solutions.
We also expect growth in the Enterprise and Mainframe business
of the company in the upcoming quarters.
Furthermore, CA has a history of reporting above expectations,
with the last four quarters generating an average surprise of
6.87%. Although we do not predict any surprise in the upcoming
Other Stocks to Consider
Other stocks in the technology industry that are currently
performing well and have solid visibility include
Aspen Tech Inc.
) with a Zacks Rank # 1 (Strong Buy).
ASPEN TECH INC (AZPN): Free Stock Analysis
CA INC (CA): Free Stock Analysis Report
NETQIN MOBILE (NQ): Free Stock Analysis
PROGRESS SOFTWA (PRGS): Free Stock Analysis
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