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ARRIS International Displays Bright Prospects Amid Risks

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On Sep 4, we issued an updated research report on ARRIS International plc (ARRS - Free Report) .

In the past month, this Zacks Rank #3 (Hold) stock has yielded a return of 7.3% compared with the industry’s gain of 4.2%.

Existing Scenario

ARRIS is transforming the entertainment experience through a holistic approach to content delivery, leveraging its expertise in cloud, network and home, to help providers anticipate demand for more personalized, relevant, and mobile experiences. The company also collaborates with its global customers to transform their entire delivery chain from content creation to consumption. All these augur well for the company’s solid long-term growth.

ARRIS’ array of wireless and wired products and solutions allows it to be flexible and customer-driven, creating competitive advantages. Recently ARRIS’ subsidiary, Ruckus Networks, announced the availability of SmartZone network controllers — enhanced versions of its SmartZone WLAN controllers. The SmartZone network controllers are powered by the company’s newly released SmartZoneOS software. In addition, Ruckus Networks unveiled a new Cloud-Ready Specialization Program for its new and existing channel partners. It will help them enhance renewable revenue streams across multiple verticals in a rapidly growing Wi-Fi infrastructure market.

Consumer demand for high speed Internet with more capacity continues to accelerate, courtesy of increasing consumption of video. As a matter of fact, the company aims to enable customers to manage this exponential bandwidth growth cost effectively through steady investments in state-of-the-art technologies.

However, customer concentration remains high for ARRIS with few customers accounting for a significant portion of its top line. Moreover, the company’s international operations are significantly exposed to foreign currency exchange rate risk.

Also, high operating expenses have been hurting the company’s bottom-line growth and may hamper financial performance going forward

Key Picks

Some top-ranked stocks from the same space are Plantronics, Inc. (PLT - Free Report) , Acacia Communications, Inc. (ACIA - Free Report) and Corning Incorporated (GLW - Free Report) . While Plantronics sports a Zacks Rank #1 (Strong Buy), Acacia and Corning carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Plantronics surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering a positive average earnings surprise of 21.09%.

Acacia exceeded the Zacks Consensus Estimate in each of the trailing four quarters with an average positive earnings surprise of 37.64%.

Corning outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering a positive average earnings surprise of 3.79%.

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