Fiber Optic Suppliers Ciena (NYSE: CIEN) and Clearfield (NASDAQ: CLFD) are trading at multi-year highs as network upgrades drive revenue growth.
Although they operate in similar industries and are well established, they are quite different companies.
With a market capitalization of $ 11.49 billion, Ciena is at the lower end of the large cap designation. The Maryland-based company manufactures networking hardware and software and provides services in the areas of transportation, delivery and data management. It serves corporate clients including cable operators, businesses and government agencies. Its clients come from all parts of the world.
The stock was up more than 16% on Dec. 9, following the company’s strong fourth-quarter report. Revenue increased 26% to $ 1 billion. Earnings were $ 0.85 per share, up 42% year-over-year.
MarketBeat earnings data shows Ciena beat revenue guidance in the quarter as earnings were in line. It exceeded expectations in terms of revenue and bottom line in the previous three quarters.
On the earnings conference call, CEO Gary Smith said: “[O]Orders for the quarter were once again significantly higher than sales. And with our third consecutive quarter of orders exceeding revenue, we have substantial momentum and increased confidence in the demand environment. “
He added that the company ended the year with its highest order backlog on record, totaling around $ 2.2 billion.
âWe doubled our backlog from last year,â added Smith.
The stock traded slightly higher in mid-session on Tuesday, following the company’s announcement that it would repurchase $ 250 million in stock.
Ciena is currently far from the buy range, with stocks trading 12% above their 10-day average. A pullback even to a short-term moving average could present a place to initiate a position.
Analysts have somewhat subdued earnings forecasts for the foreseeable future, pegging earnings growth at 7% this year and 19% in 2022. The trend of network building and the company’s growing order backlog is bodes well for future income growth which could lead to stock price appreciation.
Free field is a small cap, with a market cap of just $ 890 million. The company designs and manufactures fiber optic distribution and management products for communication networks. The majority of its revenue comes from US customers. Clearfield specializes in rural broadband connectivity.
The stock is up 6% since the company released its fourth quarter on November 4. It peaked at $ 72 on November 12 before pulling back and finding support well above its 50-day moving average.
On Tuesday, the stock was trading just above its 10-day moving average. Clearfield shares have risen 38.68% in the past three months, 155.70% year-to-date and 148.66% in the past 12 months.
Revenue for the last quarter was $ 45.2 million, up 66%. Income growth has accelerated over the past four quarters. Earnings were $ 0.53 per share, a 141% year-over-year increase. Profits have grown at triple-digit rates in six of the past seven quarters.
In the publication of the results, CEO Cheri Beranek summarized the favorable conditions contributing to the rapid growth of the company.
“Clearfield delivered record financial performance in the fourth quarter and full year 2021 in a changing market,” she said. âWe are in the middle of a historic investment cycle. As a result of our continued focus on customer service, product quality and our ability to respond with agility to changing customer needs, Clearfield has built an advantageous position in the broadband market and continues to benefit from increasing demand. of fiber.
As a small business, Clearfield doesn’t have as much analyst coverage as a larger stock. According to marketBeat analyst data, based on three ratings, analysts have a âbuyâ rating on the stock with a price target of $ 49, which is down 24.58%.
With the 10 day line support Clearfield is in the buy range. Support above key moving averages appears to be holding, although a large market pullback may still mean the stock is heading for a deeper correction.
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