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CA Technologies Reported Strong Earnings in Fiscal 3Q18

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Reason for increase

CA Technologies (CA) reported its fiscal 3Q18 financial results on January 29, 2018. It reported EPS (earnings per share) of $0.75, a 19% rise YoY (year-over-year). Strong revenue growth across all its segments coupled with strong IT (information technology) spending around the world resulted in its stellar performance.

In the graph above, you can see the EPS growth trend for CA Technologies in the last five quarters. During the period, it grew at a CAGR (compound annual growth rate) of 4.5%.

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Headwinds and future guidance

The company believes its non-GAAP (generally accepted accounting principles) diluted EPS will increase 2%–5% as reported and on a constant currency (or CC) basis. The change in the non-GAAP effective tax rate is primarily responsible for higher EPS guidance. Previously, the company expected EPS to grow 2%–0% on a CC basis.

The projected 2018 GAAP effective tax rate is 55%–58% due to US tax reform legislation, while the non-GAAP effective tax rate is expected to be around 25%.

Software companies Microsoft (MSFT) and International Business Machines (IBM) also outpaced earnings estimates by 10% and 0.1%, respectively.

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