While I believe that CA should be more aggressive repurchasing shares, and I made it known to the CEO, I left the conference feeling better about the stock. I like the fact that they made a commitment to return to shareholders 40%-50% of the free cash flow. I also like that they are done making major acquisitions, or so they say.
I believe shares of CA Inc. are grossly undervalued with a current year expected free cash flow to enterprise value of 7 times. One can make an argument that the multiple should be nearly double. However, I do not expect it to be a smooth ride. The stock is hated and these type of value situations take some time to play out. The fact that they are returning cash to investors much more aggressively than they have been should put a floor under the stock and hopefully serve as a catalyst to get the shares moving higher.