It has been about a month since the last earnings report for Viavi Solutions (VIAV Quick QuoteVIAV - Free Report) . Shares have lost about 17.2% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Viavi Solutions due for a breakout? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for Viavi Solutions Inc. before we dive into how investors and analysts have reacted as of late.

VIAV Q4 Earnings Top Estimates on Data Center, A&D Strength

Viavi reported strong fourth-quarter fiscal 2026 results, with earnings and revenues exceeding the Zacks Consensus Estimate. Non-GAAP earnings of 34 cents per share beat the consensus estimate of 30 cents by 13.33%, while revenues of $443.1 million topped the consensus mark of $433 million by 2.34% and increased 52.5% year over year.

The robust performance was driven by sustained demand from the data center ecosystem and aerospace, and defense markets, along with contributions from acquired Spirent product lines. The Network and Service Enablement (NSE) segment remained the primary growth engine, delivering nearly 70% year-over-year revenue growth.

VIAV Delivers Broad-Based Segment Growth

Network and Service Enablement generated revenues of $353.9 million, up 69.2% year over year and above management's guidance range. Growth reflected continued strength in lab, production and field products serving the data center ecosystem, contributions from Spirent product lines and healthy aerospace and defense demand.

Optical Security and Performance Products (OSP) revenues increased 9.6% year over year to $89.2 million, reaching the high end of guidance. Growth was fueled by stronger demand for 3D sensing products as well as anti-counterfeiting and other optical products, demonstrating continued momentum across the company's second operating segment.

Viavi Expands Margins on Favorable Mix

Profitability improved meaningfully during the quarter as higher revenues and a favorable product mix boosted margins. Non-GAAP gross margin expanded to 62.3% from 60.1% a year earlier, while non-GAAP operating margin climbed 960 basis points year over year to 24.0%, exceeding the high end of management's guidance.

Non-GAAP operating income more than doubled year over year to $106.4 million. Earnings benefited from approximately 2 cents per share from lower interest expense following debt reduction and tariff refunds received during the quarter.

VIAV Strengthens Balance Sheet & Cash Flow

Viavi ended the quarter with $656.7 million in total cash, short-term investments and restricted cash. Cash flow from operating activities reached $66.7 million during the quarter, while capital expenditures totaled $11.1 million.

The company strengthened its balance sheet through capital allocation initiatives. During the quarter, it completed a follow-on equity offering that generated approximately $575 million in gross proceeds. The proceeds were primarily used to retire the remaining $450 million balance of its Term Loan B, while the remaining funds enhanced liquidity. The company did not repurchase shares during the quarter as debt reduction remained the priority, although nearly $170 million remains available under its existing authorization.

Viavi Sees Healthy Demand Across End Markets

Management highlighted that demand from the data center ecosystem remains exceptionally strong, supported by investments in AI infrastructure, high-performance computing, optical networking and hyperscale data center deployments. The recently acquired Spirent high-speed Ethernet product lines continued to perform well and contributed meaningfully to quarterly growth.

The aerospace and defense business delivered another quarter of solid growth, particularly for positioning, navigation and timing products, which management expects to remain a multiyear growth driver. Meanwhile, service provider demand improved seasonally, supported by fiber monitoring deployments and cable network upgrades, although wireless demand remained stable at relatively subdued levels.

VIAV Guides for Another Sequentially Strong Quarter

For the first quarter of fiscal 2027, management projects revenues to be between $450 million and $460 million with non-GAAP earnings of 40-42 cents per share. The outlook implies sequential growth, driven by continued strength in both operating segments.

The company expects NSE revenues to be between $360 million and $368 million, supported by continued momentum across data center and aerospace and defense markets, while OSP revenues are projected to be in the range of $90-$92 million on seasonally stronger demand for 3D sensing products. Management forecasts a non-GAAP operating margin of approximately 27.1%, benefiting from tariff refunds despite additional operating costs associated with the extra week in the fiscal quarter.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in estimates revision.

The consensus estimate has shifted 47.67% due to these changes.

VGM Scores

Currently, Viavi Solutions has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock has a score of D on the value side, putting it in the bottom 40% for value investors.

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

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Viavi Solutions has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.