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Ciena (CIEN) to Report Q1 Earnings: What's in the Offing?

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Ciena Corporation (CIEN - Free Report) is scheduled to report first-quarter fiscal 2022 results on Mar 7.

The Zacks Consensus Estimate for fiscal first-quarter earnings is pegged at 47 cents, suggesting a decline of 9.6% from the year-ago quarter’s levels.

For the fiscal first quarter, management anticipates revenues between $840 million and $850 million, suggesting 12% year-over-year growth at the midpoint. The Zacks Consensus Estimate for revenues is pegged at $846.5 million, up 11.8% from the year-ago quarter’s levels.

The company beat estimates in three of the last four quarters. It has a trailing four-quarter earnings surprise of 15%, on average.

Shares of Ciena have increased 33.1% in the past year against the industry's return of 32.8%.

Ciena Corporation Price and Consensus

 

Ciena Corporation Price and Consensus

Ciena Corporation price-consensus-chart | Ciena Corporation Quote

 

Preliminary Results

Ciena recently lowered its revenue guidance for the fiscal first quarter. The company earlier expected revenues between $870 million and $910 million. The company blamed two specific types of supply-chain disruptions, which occurred at the tail end of the quarter, for the revenue guidance slash. The first involved a last-minute delay in delivering key components from a few suppliers.

The second pertained to a third-party manufacturing disruption causing a brief manufacturing hiccup. These events, coupled with a surge in Omicron cases, worsened the situation and made it difficult for the company to navigate these challenges.

Apart from that, the company anticipates that it will stay within guidance or exceed it on other important metrics for the quarter under discussion. Ciena’s GAAP gross margin for the fiscal first quarter is expected between 44% and 45%. Adjusted (non-GAAP) gross margin for the fiscal first quarter is projected in the range of 45-46%, which is at the high end of the previous guidance of 43-46%.

GAAP operating expenses for the quarter in the review are expected at $324 million, with adjusted operating expenses projected at approximately $290 million, same as the previous guidance.

Factors to Note

Ciena’s fiscal first-quarter performance is likely to benefit from strong order flow and a higher backlog amid a robust demand environment.

Strength in the company’s diversified product portfolio is likely to act as a tailwind. Ciena is witnessing strong momentum for its WaveLogic 5 Extreme solution. In the last reported quarter, the company added 34 new customers for its WaveLogic 5 Extreme solution.
In January 2022, Ciena collaborated with Gulf Bridge International to enhance the latter’s Smart Network capacity and performance on the back of its WaveLogic 5 Extreme-powered GeoMesh Extreme solution.

Ciena’s routing and switching solutions are likely to have witnessed strong uptake. In the last reported quarter, Ciena closed the deal with AT&T to acquire its Vyatta virtual routing and switching technology. The buyout reflects Ciena’s investment in its Routing and Switching roadmap to address the growing market opportunity to transform the edge, including 5G networks and cloud environment.

Incremental gains from the healthy performance of its software automation business, especially Blue Planet Software, is likely to have favored the top line. The company is likely to benefit from its international markets owing to higher bandwidth needs, cloud migration and proliferation of edge applications.

Also, Ciena’s submarine business remains strong. In February 2022, Ciena announced that NO-UK, the submarine cable system between Norway and the U.K., achieved a record-breaking 800Gb/s line rate using its GeoMesh Extreme, powered by WaveLogic 5 Extreme coherent optical technology. This will allow NO-UK to offer its customers enhanced capacity, greater speeds and a sustainable offering through reduced energy consumption.

Higher expenses on product development amid stiff competition in the networking space might have limited margin expansion in the to-be-reported quarter.

Pandemic-induced global supply chain disruptions, component shortages and related higher costs are likely to have acted as tailwinds.

What Our Model Says

Our proven model does not conclusively predicts an earnings beat for Ciena this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Ciena has an Earnings ESP of -4.88% and a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some stocks that you may consider as our model shows that these have the right combination of elements to beat on earnings this season.

DICK'S Sporting Goods (DKS - Free Report) has an Earnings ESP of +3.5% and a Zacks Rank of 1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

DICK'S Sporting Goods is scheduled to release fourth-quarter fiscal 2021 results on Mar 8. The Zacks Consensus Estimate for earnings is pegged at $3.43 per share, suggesting an increase of 41.2% from the prior-year quarter’s levels. Shares of DKS have increased 52.4% in the past year.

Marvell Technology (MRVL - Free Report) has an Earnings ESP of +1.7% and a Zacks Rank of 2 at present.

Marvell is set to release fourth-quarter fiscal 2022 results on Mar 3. The Zacks Consensus Estimate for earnings is pegged at 48 cents per share, suggesting an increase of 65.5% from the prior-year quarter’s reported figure. Shares of Marvell have increased 43.2% in the past year.

Dollar General (DG - Free Report) has an Earnings ESP of +0.7% and a Zacks Rank of 3.

Dollar General is scheduled to release fourth-quarter fiscal 2021 results on Mar 17. The Zacks Consensus Estimate for earnings is pegged at $2.56 per share, suggesting a decline of 2.3% from the year-ago quarter’s levels. Shares of DG returned 10.7% in the past year.