Market cycles typically cause significant ebbs and flows in a company’s balance sheet, and tends to increase the stocks volatility. But when a company is able to time several long-term market cycles to their advantage, the balance sheet can post all-time revenue records. The Zacks Bull of the day, Finisar Corp (FNSR –Free Report) is experiencing the latter of the two situations.
This Zacks Rank #1 (Strong Buy) company is a provider of fiber optic subsystems and network test and monitoring systems which enable high-speed data communications over local area networks, or LANs, storage area networks, or SANs, and metropolitan access networks, or MANs. They are focused on the application of digital fiber optics to provide a line of high-performance, reliable, value-added optical subsystems for data networking and storage equipment manufacturers.
Recent Earnings Data
Finisar recently reported Q2 17 earnings where they easily beat the Zacks consensus earnings and revenue estimates for the third consecutive quarter. The company posted quarter over quarter gains in Revenues +8.4%, Sales of telecom products +9.9%, Sales of Datacom products +7.7%, GAAP gross margins improved from 31.7% to 36.1%, and Non-GAAP gross margins rose from 33.1% to 37.2%, GAAP operating margins improved from 8.3% to 14.3%, and GAAP earnings per fully diluted per share +95.5%. Also, due to the impressive margin gains, management increased Q3 17 revenue guidance from the consensus of $378 million to a range of $378-398 million.
According to Jerry Rawls, CEO, “I am pleased to announce that Finisar achieved all-time quarterly records for revenues and profits in our second quarter. Revenues were $369.9 million, an increase of $28.5 million, or 8.4% over the first quarter. This growth was primarily driven by strong demand for 100G transceivers. In addition, customer demand for wavelength selective switch and ROADM line card products was strong. Our gross margins improved significantly due to a favorable product mix and leverage achieved from our vertical integration with larger volumes. The combination of revenues being at the higher end of our guidance range with higher gross margins resulted in earnings per fully diluted share above our guidance range.”
Price and Earnings Consensus Graph
As you can see in the graph below, both FNSR’s stock price and future earnings estimates have risen due to their impressive quarterly results and subsequent increase in guidance.