A month has gone by since the last earnings report for ADTRAN Holdings (ADTN Quick QuoteADTN - Free Report) . Shares have lost about 1.7% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is ADTRAN Holdings due for a breakout? 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 Q2 Earnings and Revenues Surpass Estimates

ADTRAN reported healthy second-quarter 2022 results, wherein both the bottom and the top line beat the Zacks Consensus Estimate.

Net Income

On a GAAP basis, net income in the June quarter was $2.1 million or 4 cents per share compared with $5.1 million or 10 cents per share in the prior-year quarter. The year-over-year decline despite higher revenues was primarily due to higher cost of revenues and loss on net investments.

Non-GAAP net income was $9.7 million or 19 cents per share compared with $8.1 million or 16 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate of 12 cents.

Revenues

Quarterly total revenues grew to $172 million from $143.2 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 $170 million. The company is experiencing solid demand, underscored by strong bookings in the quarter.

Revenues from Network Solutions were $156 million compared with $125.4 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. However, Services and Support revenues were $16 million, down from $17.8 million.

Other Details

Total cost of sales increased from $80.6 million to $109.5 million. GAAP gross profit came in at $62.5 million compared with $62.7 million in the prior-year quarter for respective margins of 36.3% and 43.8%. Operating income in the quarter was $8.1 million compared with $3.9 million in the year-ago quarter.

Cash Flow & Liquidity

During the first six months of 2022, ADTRAN used $5.9 million of cash in operating activities against $18.2 million cash flow generated in the prior-year period. As of Jun 30, 2022, the company had $43.4 million in cash and cash equivalents with $26 million of deferred compensation liability.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

VGM Scores

At this time, ADTRAN Holdings has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Following the exact same course, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision has been net zero. It comes with little surprise ADTRAN Holdings has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.