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CSRA (CSRA) to Report Q4 Earnings: What’s in the Cards?


CSRA Inc. CSRA is set to report fourth-quarter fiscal 2017 results on May 24. Notably, the company’s earnings have beaten the Zacks Consensus Estimate in the trailing four quarters, with an average positive surprise of 10.27%.

Last quarter, the company reported a positive earnings surprise of 6.67%. However, non-GAAP earnings of 48 cents per share remained flat on a year-over-year basis.

Further, revenues decreased 4% from the year-ago quarter to $1.22 billion, lagging the Zacks Consensus Estimate of $1.23 billion.

We note that the share price has remained under pressure due to the weak results. CSRA shares have underperformed the S&P 500 Market on a year-to-date basis. While the stock has lost 10%, the index gained 5.5%.

Factors to Consider

CSRA is the largest pure play government IT service provider. Almost 90% of the company’s revenues come from sales to the U.S. federal government either as a prime contractor or subcontractor.

CSRA Inc. Price and EPS Surprise

CSRA Inc. Price and EPS Surprise | CSRA Inc. Quote

CSRA’s deep domain knowledge and expertise in next-generation IT services is aiding it to win new contracts on a regular basis. Additionally, partnerships with technology companies like Microsoft MSFT, Amazon AMZN and Oracle is a key catalyst.

Management expects industry book-to-bills for the fourth quarter to be impacted by the ongoing transition in the Trump administration. Moreover, slow ramping of the Office of Personnel Management (OPM) background investigations contract and the large Army C4ISR program is anticipated to affect the quarter.

Earnings Whispers

Our proven model does not conclusively show that CSRA will beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, that is not the case here, as you will see below.

Zacks ESP: The Earnings ESP which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate currently is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 46 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: CSRA has a Zacks Rank #2, which increases the predictive power of ESP. However, Earnings ESP of 0.00% makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stock to Consider

Here is a stock that you may want to consider, as our model shows that it has the right combination of elements to post an earnings beat this quarter:

Angie’s List ANGI with an Earnings ESP of +33.33% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

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