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CA Inc. (CA) to Report Q1 Earnings: A Beat in the Cards?

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We expect CA Inc. (CA - Free Report) to beat expectations when it reports first-quarter 2018 results on Aug 2.

Why a Likely Positive Surprise?

Our proven model shows that CA is likely to beat earnings because it has the right combination of two key ingredients.

Zacks ESPCA’s Earnings ESP is +4.00%. This is because the company’s Most Accurate estimate is 52 cents while the Zacks Consensus Estimate is pegged lower at 50 cents. A favorable ESP serves as a meaningful and leading indicator of a likely positive surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: CA currently carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 has a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

The combination of CA’s Zacks Rank #3 and +4.00% ESP makes us reasonably optimistic of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

CA Inc. Price and EPS Surprise


What is Driving Better-than-Expected Earnings?

We note that CA has outperformed the Zacks Consensus Estimate in three of the trailing four quarters with an average positive earnings surprise of 6.2%.

We are optimistic about CA’s acquisition strategy, which has enhanced its IT management, software and services portfolio. Moreover, we believe that the diversity of its products and the increased efficiency offered by them will attract customers across sectors, lending stability to its business model.

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 to lower costs, consequently improving the bottom line.

Apart from pursuing growth through acquisitions, the company is leveraging cloud computing to enable organizations to source the best components – internal, external, private cloud, public cloud, mobile and more – to construct the most competitive business applications without wasting much time and resource.

Further, the company is focused on providing advanced management and security software required by organizations to take complete advantage of this evolution.

Other Stocks to Consider

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

Fiserv, Inc. (FISV - Free Report) has an Earnings ESP of +1.63%. It carries a Zacks Rank #2.

Apple Inc. (AAPL - Free Report) , carries a Zacks Rank #3 and has an Earnings ESP of +1.27%.

Symantec Corporation (SYMC - Free Report) , with an Earnings ESP of +16.67%, carries a Zacks Rank #2.

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