Will CA Inc. (CA) Disappoint this Earnings Season? - Analyst Blog

CA Inc. ( CA ) is set to report second-quarter fiscal 2015 results on Oct 22. Last quarter, it posted a positive surprise of 8.8%. Let us see how things are shaping up for this announcement.

Factors to Consider this Past Quarter

CA reported mixed first-quarter 2015 results wherein the bottom line beat the Zacks Consensus Estimate but the top line fell short of the consensus mark. Also, the year-over-year comparisons were not favorable either. CA's major revenue generating segments were adversely affected during the reported quarter primarily due to lower-than-expected sales of new products.

CA's main concern remains the revenue decline despite its constant efforts to spur growth through product innovations and strategic acquisitions.

Nonetheless, we believe that the breadth of its products and the increased efficiency offered by them will help attract customers across sectors, lending stability to the business model. We are positive about CA's increased cloud exposure. A decent renewal rate, modest cash position and share repurchase also appear encouraging.

However, increasing competition from International Business Machines ( IBM ) and Hewlett-Packard and exposure to Europe remain near-term headwinds.

Earnings Whispers?

Our proven model does not conclusively show that CA is likely to beat earnings this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 to surpass earnings estimates. However, that is not the case here due to the following factors:

Zacks ESP: The expected surprise prediction for CA is 0.00% since both the Most Accurate estimate and the Zacks Consensus Estimate stand at 59 cents per share.

Zacks Rank: CA's Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult.

Juniper carries a Zacks Ranks #5 (Strong Sell). We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are a couple of other companies, which you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Facebook, Inc. ( FB ), with Earnings ESP of +6.25% and a Zacks Rank #2 (Buy)

Allegheny Technologies Inc. ( ATI ), with Earnings ESP of +40.00% and a Zacks Rank #3

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INTL BUS MACH (IBM): Free Stock Analysis Report

ALLEGHENY TECH (ATI): Free Stock Analysis Report

FACEBOOK INC-A (FB): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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