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Will Buyouts & Go to Market Strategy Drive CA's Q4 Earnings?

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CA, Inc. (CA - Free Report) is slated to release fourth-quarter fiscal 2018 results on May 8. The company has a decent earnings surprise history. Notably, CA surpassed the Zacks Consensus Estimate in three of the trailing four quarters while matching the same on one occasion. It delivered an average positive earnings surprise of approximately 11%.

What the Zacks Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or #5) are best avoided.

CA has a Zacks Rank #3 and an Earnings ESP of -2.32%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Nevertheless, the company is expected to record improvement in top and bottom line figures. The Zacks Consensus Estimate for the fourth quarter is pegged at 60 cents per share, indicating an 11.1% increase on a year-over-year basis. Revenues are estimated to be around $1.08 billion, reflecting 7% year-over-year growth.

Factors to Consider

The regular enhancement of IT management, software and services portfolio via innovation and acquisitions is a major positive for the company.

Acquisitions have been one of the key strategies of CA to enhance its IT management, software and services portfolio. The company, last year, completed the acquisitions of Automic Holding GmbH and Veracode. Veracode recorded its highest bookings during the third quarter of fiscal 2018. We believe the diversity of its products and the increased efficiency offered by such buyouts will attract customers across sectors, lending stability to its business model.

Furthermore, we are optimistic about the recently launched products. The company has also been leveraging cloud computing to construct the most competitive business applications. The company is also focused on providing advanced management and security software required by organizations.

Additionally, the company’s “go to market” sales strategy brings together all the commercial functions, including sales, marketing, brand management, pricing and consumer insight. The integration of the marketing functions helps lower costs, consequently improving the bottom line.

However, intensifying competition, an uncertain economic environment and currency headwinds remain headwinds.

CA Inc. Price and EPS Surprise

CA Inc. Price and EPS Surprise | CA Inc. Quote

 

Stocks to Consider

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

Microchip Technology Incorporated (MCHP - Free Report) has an Earnings ESP of +0.15% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Analog Devices, Inc. (ADI - Free Report) has an Earnings ESP of +0.20% and a Zacks Rank #2.

NVIDIA Corporation (NVDA - Free Report) has an Earnings ESP of +0.45% and a Zacks Rank #3.

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