It has been about a month since the last earnings report for Adtran (ADTN Quick QuoteADTN - Free Report) . Shares have added about 17.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Adtran due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

ADTRAN Beats Earnings & Revenue Estimates in Q1

ADTRAN reported relatively healthy first-quarter 2022 results, wherein both the bottom and the top lines beat the Zacks Consensus Estimate.

Net Loss

On a GAAP basis, net loss in the March quarter was $1.1 million or a loss of 2 cents per share against a net income of $0.9 million or 2 cents per share in the prior-year quarter. The year-over-year decline despite higher revenues was primarily due to high operating expenses.

Non-GAAP net income was $9.9 million or 20 cents per share compared with $6.3 million or 13 cents per share in the year-ago quarter. Adjusted net income of 17 cents surpassed the Zacks Consensus Estimate of 2 cents.

Revenues

Quarterly total revenues grew to $154.5 million from $127.5 million in the prior-year quarter, driven by the increasing demand for ADTRAN’s network solutions and fiber broadband products. The top line beat the consensus estimate of $154 million. The company is experiencing solid demand, underscored by strong bookings in the quarter.

Revenues from Network Solutions were $138.4 million compared with $113.8 million in the year-ago quarter. ADTRAN’s end-to-end solutions simplify the deployment of fiber-based broadband services and provide a better customer experience. The company recorded healthy demand trends driven by the accelerated expansion of fiber-to-the-home networks, upgrades to in-home WiFi connectivity, and the adoption of cloud-based automation tools. The solid quarterly performance was further buoyed by improved customer diversification and end-to-end fiber broadband solutions. The quarter witnessed a healthy increase in revenue growth from international Tier 1 operators. Services and Support revenues were $16.1 million, up from $13.7 million.

Other Details

The total cost of sales increased from $100.2 million to $73.9 million. GAAP gross profit came in at $54.3 million compared with $53.6 million in the prior-year quarter for respective margins of 35.2% and 42%. Operating loss in the quarter was $0.1 million compared with $1.3 million in the year-ago quarter.

Cash Flow & Liquidity

In the first quarter of 2022, ADTRAN generated $4.9 million of cash from operating activities compared with $10.7 million in the prior-year period. As of Mar 31, 2022, the company had $54 million in cash and cash equivalents with $29.7 million of deferred compensation liability.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

The consensus estimate has shifted -10% due to these changes.

VGM Scores

At this time, Adtran 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 D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Adtran has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.