Today's Post-Market Laggard: CA (CA)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified CA ( CA) as a post-market laggard candidate. In addition to specific proprietary factors, Trade-Ideas identified CA as such a stock due to the following factors:

  • CA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $69.5 million.
  • CA is down 2.6% today from today's close.

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More details on CA:

CA, Inc. provides information technology (IT) management software and solutions that help organizations develop, manage, and secure IT environments in the United States and internationally. It operates through Mainframe Solutions, Enterprise Solutions, and Services segments. The stock currently has a dividend yield of 3.2%. CA has a PE ratio of 17.9. Currently there are 2 analysts that rate CA a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for CA has been 2.7 million shares per day over the past 30 days. CA has a market cap of $13.9 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.16 and a short float of 4.4% with 6.78 days to cover. Shares are up 3.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates CA as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • CA's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.17, which illustrates the ability to avoid short-term cash problems.
  • The gross profit margin for CA INC is currently very high, coming in at 85.52%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 20.34% trails the industry average.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • CA INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, CA INC reported lower earnings of $1.96 versus $2.07 in the prior year. This year, the market expects an improvement in earnings ($2.49 versus $1.96).

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