It has been about a month since the last earnings report for Adtran (ADTN Quick QuoteADTN - Free Report) . Shares have lost about 4.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Adtran due for a breakout? 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.

ADTRAN Q2 Earnings Beat Estimates, Revenues Up Y/Y

ADTRAN reported impressive second-quarter 2021 results, wherein both the bottom line and the top line surpassed their respective Zacks Consensus Estimate. Solid top-line growth, strong segment performance and increased demand for its fiber access platforms backed by its business resiliency drove the Huntsville, AL-based networking equipment maker’s quarterly performance.

Net Income

On a GAAP basis, net income in the June quarter was $5.1 million or 10 cents per share compared with $0.8 million or 2 cents per share in the prior-year quarter. The year-over-year improvement was mainly driven by top-line expansion.

Non-GAAP net income came in at $8.1 million or 16 cents per share compared with $1.6 million or 4 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 3 cents.

Revenues

Quarterly total revenues grew to $143.2 million from $128.7 million in the prior-year quarter, reflecting the increased demand for ADTRAN’s network solutions. The top line surpassed the consensus estimate of $142 million.

The company’s business continues to be driven by solid demand for its fiber access platforms. This, in turn, boosted ADTRAN’s multiple business segments, including Software-as-a-Service platforms, infrastructure and in-home premises equipment, backed by strength exhibited by Tier 3 regional service providers across the United States and Europe.

Sales of network solutions were $125.4 million compared with $111.3 million in the year-ago quarter. ADTRAN’s end-to-end solutions simplify the deployment of fiber-based broadband services and provide better customer experience. Services and support sales were $17.8 million, up from $17.4 million.

Other Details

The total cost of sales increased from $75.2 million to $80.6 million. Gross profit came in at $62.7 million compared with $53.5 million in the prior-year quarter. Operating income in the quarter was $3.9 million against an operating loss of $6 million in the year-ago quarter.

The company announced that its board of directors approved a cash dividend of 9 cents per share for the second quarter of 2021. The amount is payable on Sep 2 to shareholders on record as of Aug 19.

Cash Flow & Liquidity

During the first six months of 2021, ADTRAN generated $18.2 million of net cash from operating activities compared with $1.7 million in the year-ago quarter. As of Jun 30, 2021, the company had $69.9 million in cash and cash equivalents with $116.1 million of total current liabilities.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -12.5% due to these changes.

VGM Scores

At this time, Adtran has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. 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. Notably, Adtran has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.