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Why Is Ciena (CIEN) Down 6.8% Since the Last Earnings Report?
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A month has gone by since the last earnings report for Ciena Corporation (CIEN - Free Report) . Shares have lost about 6.8% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it 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.
Ciena Misses Earnings and Revenue Estimates in Q1
Ciena Corpreported dismal first-quarter fiscal 2017 results. Both adjusted earnings (excluding all one-time items but including stock-based compensation) of $0.18 per share and revenues of $621.5 million missed the Zacks Consensus Estimate of $0.20 and $632.6 million, respectively.
However, on a year-over-year basis, revenues grew 8.4%.
Quarterly Details
Product revenues (81.5% of revenues) were up 10.8% year over year to $507 million. Services revenues (18.5% of revenues) decreased nearly 1% year over year to $114.5 million.
Segment-wise, networking platforms (78.8% of total revenue) grew 9% year over year to $490 million. Revenues from Software and software-related services (6.3% of total revenue) soared 54.7% year over year to $39.3 million. Global services revenues (14.9% of total revenue) declined 6.1% from the year-ago quarter to $92.2 million.
Region-wise, Ciena’s sales grew 3.4% in North America, 13.4% in EMEA, 59% in Asia Pacific but fell 19.6% in Caribbean and Latin America.
U.S. customers accounted for 61.1% of its revenues, of which 10% was contributed by two customers each.
The company’s adjusted gross margin expanded 20 basis points (bps) year over year to 44.9% while adjusted operating margin expanded 20 bps to 8.5%.
Balance Sheet
The company ended the fiscal with cash and investments of $1.05 billion and long-term debt of approximately $1.02 billion.
Ciena generated solid operating cash flow of $26.3 million in the quarter compared with approximately $15 million generated in the prior-year quarter.
Guidance
Ciena also provided its guidance for second-quarter fiscal 2017. Revenues for the current quarter are forecast in the range of $680–$710 million. Non-GAAP gross margin is projected to be approximately in the mid-40% range. Non-GAAP operating expenses are projected to be $240 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 10.1% due to these changes.
At this time, Ciena's stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with an 'D'. However, 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 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Why Is Ciena (CIEN) Down 6.8% Since the Last Earnings Report?
A month has gone by since the last earnings report for Ciena Corporation (CIEN - Free Report) . Shares have lost about 6.8% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it 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.
Ciena Misses Earnings and Revenue Estimates in Q1
Ciena Corpreported dismal first-quarter fiscal 2017 results. Both adjusted earnings (excluding all one-time items but including stock-based compensation) of $0.18 per share and revenues of $621.5 million missed the Zacks Consensus Estimate of $0.20 and $632.6 million, respectively.
However, on a year-over-year basis, revenues grew 8.4%.
Quarterly Details
Product revenues (81.5% of revenues) were up 10.8% year over year to $507 million. Services revenues (18.5% of revenues) decreased nearly 1% year over year to $114.5 million.
Segment-wise, networking platforms (78.8% of total revenue) grew 9% year over year to $490 million. Revenues from Software and software-related services (6.3% of total revenue) soared 54.7% year over year to $39.3 million. Global services revenues (14.9% of total revenue) declined 6.1% from the year-ago quarter to $92.2 million.
Region-wise, Ciena’s sales grew 3.4% in North America, 13.4% in EMEA, 59% in Asia Pacific but fell 19.6% in Caribbean and Latin America.
U.S. customers accounted for 61.1% of its revenues, of which 10% was contributed by two customers each.
The company’s adjusted gross margin expanded 20 basis points (bps) year over year to 44.9% while adjusted operating margin expanded 20 bps to 8.5%.
Balance Sheet
The company ended the fiscal with cash and investments of $1.05 billion and long-term debt of approximately $1.02 billion.
Ciena generated solid operating cash flow of $26.3 million in the quarter compared with approximately $15 million generated in the prior-year quarter.
Guidance
Ciena also provided its guidance for second-quarter fiscal 2017. Revenues for the current quarter are forecast in the range of $680–$710 million. Non-GAAP gross margin is projected to be approximately in the mid-40% range. Non-GAAP operating expenses are projected to be $240 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 10.1% due to these changes.
Ciena Corporation Price and Consensus
Ciena Corporation Price and Consensus | Ciena Corporation Quote
VGM Scores
At this time, Ciena's stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with an 'D'. However, 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 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.