Headquartered in Hanover, MD, Ciena Corporation (CIEN - Free Report) is a network specialist that focuses on expanding the possibilities for its customers' networks while reducing their cost of ownership. The company’s systems, software, and services target specific network points so that telcos, cable operators, governments, and enterprises can best utilize the new applications that are driving their businesses forward.
Shares Soar on Strong Q2 Earnings
By noon on the day Ciena reported second quarter earnings not too long ago, shares of the company were up over 25% thanks to its strong top and bottom line performance.
Revenue of $865 million popped 18.5% year-over-year and easily beat the Zacks Consensus Estimate of $816 million. Ciena’s segment revenues also showed strong growth. Networking platforms revenue was up 17.8% year-over-year to $697 million, software and software-related revenue increased 23.3% to $47.7 million, and global services revenue hit $120.3 million, up 20.8% year-over-year.
Non-GAAP EPS of 48 cents per share also beat our consensus estimate, while gross margin increased 3.1 percentage points to 43.3%. And, operating margin more than doubled in Q2 to 9.3% (thanks to that gross margin jump) compared to 4.4% in the year-ago quarter.
CIEN is On the Rise
Since January, shares of CIEN have jumped roughly 30% compared to the S&P 500’s return of roughly 15.4%.
Earnings estimates have since been rising, and the stock is now a Zacks Rank #1 (Strong Buy).
For the current fiscal year, 12 analysts have revised their estimate upwards in the past 60 days, and the Zacks Consensus Estimate has jumped 18 cents during that same time period. 2020 looks pretty strong too, with earnings expected to still remain in double-digit growth territory.
"We are entering the second half with strong visibility and increased confidence for the full fiscal year supported by favorable industry dynamics and growing competitive advantage,” said Gary Smith, President and CEO.
Thanks to this bullish near-term outlook and soaring sales, the future is looking promising for Ciena. If you’re an investor searching for a computer sector stock to add to your portfolio, make sure to keep CIEN on your shortlist.
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