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CA, Inc. (CA) Hits 52-Week High on Impressive Q4 Earnings
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Shares of CA, Inc. (CA - Free Report) hit a new 52-week high of $32.38 on May 31, eventually closing at $32.32. The stock has delivered a strong one-year return of 8.1% and a year-to-date return of 13.2%. The average trading volume for the last three months aggregated approximately 2,801K.
What is Driving the Stock Upward?
CA’s shares have been on the rise ever since the company declared better-than-expected fourth-quarter fiscal 2016 results on May 11, 2016. Also, an encouraging fiscal 2017 outlook, a modest cash position and share repurchase drove CA shares higher.
The company posted adjusted earnings (including stock-based compensation but excluding other one-time items) of 56 cents, which came ahead of the Zacks Consensus Estimate of 52 cents. On a GAAP basis, earnings came in at 41 cents compared with 33 cents a year ago.
Although CA’s revenues of $1.009 billion decreased 1.4% from the year-ago quarter, it surpassed the Zacks Consensus Estimate of $993 million.
With respect to earnings surprise, this Zacks Rank #3 (Hold) stock has surpassed the Zacks Consensus Estimate in the last four quarters with an average surprise of 4.2%.
For fiscal 2017, the company continues to expect total revenue growth in the range of flat to 1%, which translates to $4.04 billion to $4.08 billion (mid-point $4.06 billion). The Zacks Consensus Estimate for fiscal 2017 revenues is pegged at $4.06 billion.
CA expects non-GAAP earnings per share from continuing operations to increase in a range of 1%-3%. According to the company, “At March 31, 2016 exchange rates, this translates to reported non-GAAP diluted earnings per share from continuing operations of $2.51 to $2.56.” The Zacks Consensus Estimate for fiscal 2017 is pegged at $2.35.
An encouraging fiscal 2017 outlook and a bright overall trend resulted in upward estimate revisions for CA. Over the last 60 days, three out of four estimates for CA were revised upward for fiscal 2017. The Zacks Consensus Estimate for fiscal 2017 went up 2.2% (5 cents) to $2.35.
Moreover, the stock looks attractive from a valuation perspective. This is because CA currently trades at a forward P/E of 13.63x as against the industry group average of 101.40x, which signifies a huge downward potential.
Furthermore, we believe that 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.
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, which in turn helps the company to improve its bottom line, by integrating the marketing functions in order to lower cost.
On the other hand, increasing competition from Oracle (ORCL - Free Report) , International Business Machines (IBM - Free Report) and HP Inc. (HPQ - Free Report) and exposure to Europe remain the near-term headwinds.
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CA, Inc. (CA) Hits 52-Week High on Impressive Q4 Earnings
Shares of CA, Inc. (CA - Free Report) hit a new 52-week high of $32.38 on May 31, eventually closing at $32.32. The stock has delivered a strong one-year return of 8.1% and a year-to-date return of 13.2%. The average trading volume for the last three months aggregated approximately 2,801K.
What is Driving the Stock Upward?
CA’s shares have been on the rise ever since the company declared better-than-expected fourth-quarter fiscal 2016 results on May 11, 2016. Also, an encouraging fiscal 2017 outlook, a modest cash position and share repurchase drove CA shares higher.
The company posted adjusted earnings (including stock-based compensation but excluding other one-time items) of 56 cents, which came ahead of the Zacks Consensus Estimate of 52 cents. On a GAAP basis, earnings came in at 41 cents compared with 33 cents a year ago.
Although CA’s revenues of $1.009 billion decreased 1.4% from the year-ago quarter, it surpassed the Zacks Consensus Estimate of $993 million.
With respect to earnings surprise, this Zacks Rank #3 (Hold) stock has surpassed the Zacks Consensus Estimate in the last four quarters with an average surprise of 4.2%.
For fiscal 2017, the company continues to expect total revenue growth in the range of flat to 1%, which translates to $4.04 billion to $4.08 billion (mid-point $4.06 billion). The Zacks Consensus Estimate for fiscal 2017 revenues is pegged at $4.06 billion.
CA expects non-GAAP earnings per share from continuing operations to increase in a range of 1%-3%. According to the company, “At March 31, 2016 exchange rates, this translates to reported non-GAAP diluted earnings per share from continuing operations of $2.51 to $2.56.” The Zacks Consensus Estimate for fiscal 2017 is pegged at $2.35.
An encouraging fiscal 2017 outlook and a bright overall trend resulted in upward estimate revisions for CA. Over the last 60 days, three out of four estimates for CA were revised upward for fiscal 2017. The Zacks Consensus Estimate for fiscal 2017 went up 2.2% (5 cents) to $2.35.
Moreover, the stock looks attractive from a valuation perspective. This is because CA currently trades at a forward P/E of 13.63x as against the industry group average of 101.40x, which signifies a huge downward potential.
Furthermore, we believe that 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.
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, which in turn helps the company to improve its bottom line, by integrating the marketing functions in order to lower cost.
On the other hand, increasing competition from Oracle (ORCL - Free Report) , International Business Machines (IBM - Free Report) and HP Inc. (HPQ - Free Report) and exposure to Europe remain the near-term headwinds.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>