CA Inc (CA) To Report Q4 Earnings: What's In The Cards?

CA Inc. (NASDAQ:CA) is set to report fourth-quarter 2017 results on May 11. Last quarter, the company delivered in-line earnings. It’s worth mentioning that the company posted a positive earnings surprise in each of the trailing four quarters with an average surprise of 5.9%. Let's see how things are shaping up for this announcement.

Factors at Play

CA reported dull third-quarter results. The year-over-year revenue comparison was also not favorable. The year-over-year decrease was primarily due to lower-than-expected revenues from Subscription and maintenance, Professional Services and Software fees and other revenues.

Nonetheless, we believe that the increased efficiency offered by the wide range of products will attract customers across sectors, lending stability to the business model. We are positive about CA’s increased cloud exposure.

Recently, CA announced the completion of the acquisition of a Burlington security software company Veracode for approximately $614 million in cash. We feel, the association will strengthen the cloud computing business of CA and make it a complete service provider. Also, this acquisition marks the continuation of CA’s strategy to grow inorganically, striking a balance between making investments for growth and returning cash to shareholders.

CA has also adopted a “go to market” sales strategy. This brings together all the commercial functions including sales, marketing, brand management, pricing and consumer insight. The integration of the marketing functions helps in lowering costs, thereby improving the bottom line.

On the other hand, increasing competition from Oracle (NYSE:ORCL) , International Business Machines (NYSE:IBM) and HP Inc. and exposure to Europe remain near-term headwinds.

CA Inc. Price and EPS Surprise

Earnings Whispers

Our proven model does not conclusively show that CAwill beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: CA’s ESP is 0.00% since both the Most Accurate estimate and the Zacks Consensus Estimate stand at 45 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter

Zacks Rank:CA carries a Zacks Rank #3, which increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings surprise.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks to Consider

Here are some companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Global Partners LP (NYSE:GLP) , with an Earnings ESP of +233.33% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

TopBuild Corp. (NYSE:BLD) , with an Earnings ESP of +5.26% and a Zacks Rank #2.

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