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CSRA's Q2 Earnings to Gain From Contract Wins, Solid Backlog

CSRA Inc. CSRA is set to report fiscal second-quarter 2018 earnings on Nov 7. We expect the company to deliver strong results driven by frequent contract wins, solid backlog, improving federal spending environment and revenue visibility.

Total backlog at the end of the last quarter was $15.6 billion. Per management, revenue visibility has improved, with 91% revenues to come from existing contracts.

Notably, the company beat the Zacks Consensus Estimate in the trailing four quarters, with an average positive surprise of 10.40%. Last quarter, the company delivered a positive earnings surprise of 6.67%.

However, the top-line performance has not been consistent. The company has missed the Zacks Consensus Estimate for revenues in three of the trailing four quarters.

CSRA’s stock has returned 0.1% year to date, substantially underperforming the 31.9% rally of the industry.

Factors to Consider

CSRA is benefiting from its domain expertise and strong partnership base that includes the likes of ServiceNow Inc. NOW, Microsoft Corporation MSFT and Red Hat among others. The small tuck-in acquisition of NES is expected to boost the company’s ability to win contracts.

CSRA Inc. Price and EPS Surprise


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

CSRA is likely to report year-over-year revenue growth in the soon-to-be-reported quarter. The company continues to win contracts regularly. During the quarter, CSRA and its Eagle Alliance joint venture with Northrop Grumman received a potential 10-year, $2.4-billion contract from the U.S. National Security Agency (NSA) relating to the enterprise IT service portion of the Groundbreaker contract.

Moreover, CSRA is expected to gain from the improving spending environment and passing of the Modernizing Government Technology Act.

Why a Likely Positive Surprise?

Moreover, our proven model shows that CSRA is likely to beat earnings due to the favorable combination of Zacks Rank #3 (Hold) and +1.70% Earnings ESP.  You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates.

Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

Stocks to Consider

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

NVIDIA Corporation NVDA has an Earnings ESP of +0.71% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.


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