Here's Why It's Time For Investors To Consider Adding CA Stock

CA Inc. CA appears to be a solid bet right now because of its sound growth strategies, which are driving its top and bottom line performances. In the recently reported quarter, the company's revenues of $1.093 billion increased 9% on a year-over-year basis. The quarterly revenue figure was the highest in four years while the revenue growth rate was the highest in the last six years.

Moreover, non-GAAP earnings increased 19% year over year to 75 cents per share. Notably, the company has surpassed the Zacks Consensus Estimate in three of the last four quarters while matching the same in the remaining quarter. The average positive earnings surprise for the trailing four quarters is 10.98%.

The company also witnessed positive estimate revisions for fiscal 2018 and 2019 earnings in the last 30 days. For fiscal 2018, the current expectation is $2.59 per share and for fiscal 2019 it is $2.77 per share compared with the previous expectations of $2.46 and $2.58, respectively.

Other Driving Factors

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

Management is extremely optimistic about the recently launched products, of which the most notable ones are CA Continuous Delivery Director or CDD, which is meant for overall monitoring of DevOps Workflow, CA BlazeMeter API Test, which targets testing teams of agile projects and CA Trusted Access Manager for Z meant for mainframe security.

The acquired entities are also performing well, Veracode that was acquired last year recorded its highest bookings during the third quarter. These acquisitions have also increased the diversity of CA's products, which is beneficial for addition of customers, lending stability to its business model.

Notably, the company's recent move to enter the collaborative robotics market is yet another positive. CA will be working with Tampere University of Technology and Finland based Tieto for the research and development of human-robot relationship.

Driven by the enriched solutions suite, management continues to be optimistic about its mainframe business. Apart from experiencing "long-term renewal yields and healthy new sales," the company's Mainframe segment's margin also witnessed benefits from lower corporate overheads during the third-quarter of fiscal 2018. The company's Enterprise Solutions segment also witnessed higher margins backed by increased revenues and efficiency.

Additionally, CA's "go to market" sales strategy integrates the commercial functions of sales, marketing, brand management, pricing and consumer insight, which helps it in lowering costs, thereby improving the bottom line.

Given all the positives, we believe that this Zacks Rank #2 (Buy) stock deserves a position in investors' portfolio.