) is set to report first-quarter fiscal 2015 results on Jul 23.
Over the past four quarters, the company has posted positive
earnings surprise of 10.23%. Let us see how things are shaping up
for this announcement.
Factors this Past Quarter
CA's fourth quarter was impacted by lower-than-expected sales of
new products and lower licensing agreements, which lead to
unfavorable year-over-year comparisons. CA also provided a cautious
outlook for fiscal 2015 anticipating revenue and earnings
CA's main concern remains the revenue decline despite its
constant efforts to spur growth through product innovations and
strategic acquisitions. The company has also nearly completed its
restructuring initiative to incorporate a leaner cost structure
which is expected to improve profitability.
We are positive about CA's increased cloud exposure. Decent
renewal rate, modest cash position and share repurchase also appear
encouraging. The company has also resorted to divestures to focus
on its core products as well. Recently, CA agreed to divest its
arcserve data protection business to Marlin Equity Partners
However, increasing competition from International Business
) and exposure to Europe remain the near-term headwinds. Moreover,
lower bookings continue to be an overhang.
Our proven model does not conclusively show that CA will beat
earnings this quarter. That is because a stock needs to have both a
and a Zacks Rank #1, 2 or 3 for this to happen. That is not the
case here as you will see below.
: The Earnings ESP, which represents the difference between the
Most Accurate Estimate and the Zacks Consensus Estimate, is +1.75%.
This is because the Most Accurate estimate stands at 58 cents while
the Zacks Consensus Estimate is pegged at 57 cents.
: CA's Zacks Rank #4 (Sell) which lowers the predictive power of
Moreover, we caution against stocks with Zacks Rank #4 and 5
(Sell-rated stocks) going into the earnings announcement,
especially when the company is seeing negative estimate revisions
Stocks to Consider
Here are a couple of companies worth considering, which as per
our model shows have the right combination of elements to post an
earnings beat this quarter:
), with an Earnings ESP of +31.58% and a Zacks Rank #1 (Strong
F5 Networks, Inc.
), with an Earnings ESP of +3.81% and a Zacks Rank #2 (Buy).
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