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CA Inc. (CA - Analyst Report) 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 declines.

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 (Marlin).

However, increasing competition from International Business Machines and Hewlett-Packard (HPQ - Analyst Report) and exposure to Europe remain the near-term headwinds. Moreover, lower bookings continue to be an overhang.  

Earnings Whispers?

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

Zacks ESP: 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.

Zacks Rank: CA’s Zacks Rank #4 (Sell) which lowers the predictive power of ESP.

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 momentum.

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:

NVIDIA Corp. (NVDA - Analyst Report), with an Earnings ESP of +31.58% and a Zacks Rank #1 (Strong Buy).

F5 Networks, Inc. (FFIV - Snapshot Report), with an Earnings ESP of +3.81% and a Zacks Rank #2 (Buy).

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