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Ciena (CIEN) Up 14.8% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Ciena (CIEN - Free Report) . Shares have added about 14.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ciena due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Ciena’s Q4 Earnings Miss Estimates, Revenues Fall Y/Y
Ciena reported lackluster fourth-quarter fiscal 2020 (ended Oct 31, 2020) results, wherein the bottom line missed the Zacks Consensus Estimate.
The networking systems and software company expects the challenging market conditions to persist in the near term.
Net Income
On a GAAP basis, net income in the quarter was $65 million or 42 cents per share compared with $80.3 million or 51 cents per share in the year-ago quarter. The deterioration resulted from a higher provision for income tax.
Adjusted net income came in at $94.5 million or 60 cents per share compared with $90.4 million or 58 cents per share in the prior-year quarter. The bottom line missed the Zacks Consensus Estimate by 4 cents.
In fiscal 2020, GAAP net income was $361.3 million or $2.32 per share compared with $253.4 million or $1.61 per share in fiscal 2019.
Revenues
Quarterly total revenues fell 14.4% year over year to $828.5 million, primarily due to a slowdown in orders caused by the pandemic. The top line matched the consensus estimate.
Region-wise, revenues in the Americas were $531.6 million, down 25.7% year over year. Revenues in Europe, Middle East and Africa were $157.6 million, up from $153 million. Asia-Pacific revenues totaled $139.3 million, up 40.3%.
In fiscal 2020, revenues declined 1.1% year over year to $3,532.2 million.
Quarterly Segment Results
Total revenues in Networking Platforms decreased 20.4% year over year to $635.3 million. Platform Software and Services revenues were $54.5 million compared with $41.2 million in the prior-year quarter. Blue Planet Automation Software and Services revenues increased from $16.6 million to $20.9 million. Total revenues in Global Services were $117.8 million, up 4.7%.
Other Details
Adjusted gross margin was 49.5% compared with 43.8% in the year-ago quarter. Adjusted operating expenses were $278.9 million, down from $295.3 million. Operating income improved to $93.5 million from $93.2 million. Adjusted operating income increased to $130.9 million from $129.2 million. The adjusted operating margin came in at 15.8% compared with 13.3% in the prior-year quarter. Adjusted EBITDA was $154.5 million, up from $151.6 million.
The company stated that it will be reinstituting the share repurchase program in the first quarter of 2021. It is targeting repurchases of $150 million in fiscal 2021.
Cash Flow & Liquidity
In fiscal 2020, Ciena generated $493.7 million of net cash from operating activities compared with $413.1 million in fiscal 2019.
As of Oct 31, the company had $1,088.6 million in cash and cash equivalents with $676.4 million of net long-term debt compared with the respective tallies of $904 million and $680.4 million a year ago.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -7.58% due to these changes.
VGM Scores
Currently, Ciena has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Ciena has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Ciena (CIEN) Up 14.8% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Ciena (CIEN - Free Report) . Shares have added about 14.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ciena due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Ciena’s Q4 Earnings Miss Estimates, Revenues Fall Y/Y
Ciena reported lackluster fourth-quarter fiscal 2020 (ended Oct 31, 2020) results, wherein the bottom line missed the Zacks Consensus Estimate.
The networking systems and software company expects the challenging market conditions to persist in the near term.
Net Income
On a GAAP basis, net income in the quarter was $65 million or 42 cents per share compared with $80.3 million or 51 cents per share in the year-ago quarter. The deterioration resulted from a higher provision for income tax.
Adjusted net income came in at $94.5 million or 60 cents per share compared with $90.4 million or 58 cents per share in the prior-year quarter. The bottom line missed the Zacks Consensus Estimate by 4 cents.
In fiscal 2020, GAAP net income was $361.3 million or $2.32 per share compared with $253.4 million or $1.61 per share in fiscal 2019.
Revenues
Quarterly total revenues fell 14.4% year over year to $828.5 million, primarily due to a slowdown in orders caused by the pandemic. The top line matched the consensus estimate.
Region-wise, revenues in the Americas were $531.6 million, down 25.7% year over year. Revenues in Europe, Middle East and Africa were $157.6 million, up from $153 million. Asia-Pacific revenues totaled $139.3 million, up 40.3%.
In fiscal 2020, revenues declined 1.1% year over year to $3,532.2 million.
Quarterly Segment Results
Total revenues in Networking Platforms decreased 20.4% year over year to $635.3 million. Platform Software and Services revenues were $54.5 million compared with $41.2 million in the prior-year quarter. Blue Planet Automation Software and Services revenues increased from $16.6 million to $20.9 million. Total revenues in Global Services were $117.8 million, up 4.7%.
Other Details
Adjusted gross margin was 49.5% compared with 43.8% in the year-ago quarter. Adjusted operating expenses were $278.9 million, down from $295.3 million. Operating income improved to $93.5 million from $93.2 million. Adjusted operating income increased to $130.9 million from $129.2 million. The adjusted operating margin came in at 15.8% compared with 13.3% in the prior-year quarter. Adjusted EBITDA was $154.5 million, up from $151.6 million.
The company stated that it will be reinstituting the share repurchase program in the first quarter of 2021. It is targeting repurchases of $150 million in fiscal 2021.
Cash Flow & Liquidity
In fiscal 2020, Ciena generated $493.7 million of net cash from operating activities compared with $413.1 million in fiscal 2019.
As of Oct 31, the company had $1,088.6 million in cash and cash equivalents with $676.4 million of net long-term debt compared with the respective tallies of $904 million and $680.4 million a year ago.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -7.58% due to these changes.
VGM Scores
Currently, Ciena has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Ciena has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.