Earnings Preview: CA Inc. - Analyst Blog
24 Ottobre 2012 - 1:50PM
Zacks
CA Inc. (CA) is
scheduled to announce its second quarter 2013 results after the
close of trading on October 25, 2012. We do not see much variation
in analysts’ estimates at this point.
First Quarter
Recap
The company reported decent first
quarter 2013 adjusted earnings per share (EPS) of 60 cents, ahead
of the Zacks Consensus Estimate of 56 cents. Total revenue in the
reported quarter came in at $1.145 billion, down 1.5% from $1.163
billion in the year-ago quarter.
The company witnessed total
bookings of $553 million in the first quarter, down 36.0% year over
year, primarily due to a decrease in renewals. The company had
previously stated that it expects fiscal year 2013 renewal
portfolio to decline in the single digit range annually, with the
first quarter being the low point.
Reported GAAP net income was 51
cents per share versus 48 cents per share in the year-ago
quarter.
Fiscal 2013
Guidance
For fiscal 2013, the company
expects revenue growth in the range of 1.0% to 2.0%. GAAP diluted
earnings per share from continuing operations in constant currency
are expected to rise in the range of 12.0% to 14.0%.
Non-GAAP diluted earnings per share
from continuing operations are expected to grow in the 10.0% to
12.0% range. This translates to non-GAAP diluted earnings per share
of $2.45 to $2.50 and cash flow from continuing operations of $1.54
billion to $1.57 billion.
Agreement of
Analysts
Out of the seven analysts providing
estimates for the second quarter, none revised their estimates over
the last 30 days. Also, none revised their estimate over the last
30 days for the December quarter. Similarly, no revision was
witnessed for fiscal 2013 and 2014.
Some analysts are optimistic about
sales based on the focus of the new management towards developing
regions. Moreover, the company is also making considerable effort
to enhance its product portfolio by offering multiple versions of
the same product, so that the customers can enjoy the most recent
offerings.
Moreover, analysts are also
considerably optimistic about the fact that the company offers the
'SaaS first' policy for all new development, so that it can
overtake business from other SaaS based vendors like
ServiceNow.
The lack of estimate revisions
reflects the fact that there were no major catalysts during the
quarter. Consequently, the analysts are sticking to the estimates
projected post first quarter earnings.
Magnitude of Estimate
Revisions
The magnitude of revision is also
minimal post the company’s first quarter results. Overall,
estimates for the upcoming quarter have remained constant over a
period of 30 days, but dipped by 2 cents to 55 cents over the past
90 days. The estimates of 2013 remained constant over the last 30
and 90 days to $2.34. For fiscal 2014, estimates remained constant
over the last 30 days, but declined by 2 cents to $2.53 over the
last 90 days.
Recommendation
CA Inc. posted decent first quarter
results exceeding the earnings estimates, although revenue declined
on a year-over-year basis. This apart, the company witnessed
decline in bookings. However, the product demand trend was moderate
in the reported quarter.
Looking into the company’s enhanced
product portfolio, growing customer base and revival in the
macroeconomic scenario, we believe that the company has provided
conservative guidance for fiscal 2013.
Intense competition in the software
and cloud computing space from big players such as
IBM (IBM) and Hewlett-Packard
(HPQ) is a challenge. In addition, its high debt balance and
European exposure may pose as challenges going forward. Reduction
in tech spending by government agencies and European exposure are
the other headwinds going forward.
The company currently has a Zacks
#3 Rank, implying a short-term Hold rating.
CA INC (CA): Free Stock Analysis Report
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