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Ciena (CIEN) to Report Q1 Earnings: What's in the Offing?

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Ciena Corporation CIEN is scheduled to report first-quarter fiscal 2020 results (ended Jan 31, 2020) on Mar 5, before the opening bell. In the last reported quarter, the company delivered a negative earnings surprise of 7.9%, missing the Zacks Consensus Estimate by 5 cents. Ciena topped the Zacks Consensus Estimate for earnings thrice in the trailing four quarters, the beat being 11.7%, on average.

The Hanover, MD-based company is expected to have recorded higher aggregate revenues on a year-over-year basis in the to-be-reported quarter. Thanks to its balanced and resilient business model that helped drive broad-based growth across geographies and verticals. Ciena continued to benefit from market share gains backed by technology leadership and diversified customer base in high-growth markets.  

Factors at Play  

Leveraging its technology leadership and investment capacity, Ciena boasts the most industry-leading portfolio. Coupled with global scale and diversification across geographies and customer segments, the company is likely to benefit from strong market share gains and differentiated financial performance across the business.

Ciena is seeing increased engagements and opportunities across multiple market segments as customers continue to pursue strategic partnerships. The fundamental demand drivers for the company’s business remained very compelling while the industry dynamics were largely unchanged from the past several quarters. It witnessed strength in customer spending (particularly with service provider customers) in North America and EMEA.

During the fiscal first quarter, Ciena closed the acquisition of Centina Systems — a leading provider of service assurance analytics and network performance management solutions. The acquisition has added a crucial set of capabilities that allow Blue Planet to execute on the closed-loop automation vision. This is expected to get reflected positively in the upcoming results.

The company was picked by Telia Carrier, a Sweden-based telecommunication services company, as the provider of a new Open Optical Line System (O-OLS) in Europe. The network provider also plans to deploy Ciena’s Waveserver transponders, driven by Wavelogic Ai and WaveLogic 5 Extreme coherent optics, which can be deployed in the new O-OLS in Europe, as well as in other existing Line Systems in Telia Carrier’s network, in both Europe and the United States.

Ciena offered its WaveLogic technology, WaveLogic 5 Extreme (WL5e), to Telefonica’s global telecommunications infrastructure company — Telxius for deployment in subsea cable. The deployment of WL5e took place in the course of a trial wherein Telxius’ BRUSA cable achieved 550 Gbps single-wavelength channel speed. The company’s performance is expected have benefited from these positives.

For the fiscal first quarter, the Zacks Consensus Estimate for total revenues stands at $822 million, implying a rise of 5.5% from the year-ago quarter’s reported figure. Consequently, adjusted earnings per share are pegged at 38 cents, indicating an increase of 15.2% from the prior-year quarter’s reported figure.

What Our Model Says

Our proven model doesn’t predict an earnings beat for Ciena this time around.  The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here as you’ll see below:

Earnings ESP: Ciena’s Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00% as both are pegged at 38 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Ciena Corporation Price and EPS Surprise

Zacks Rank: Ciena currently has a Zacks Rank #3.

Stocks to Consider

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Burlington Stores, Inc. (BURL - Free Report) is slated to release quarterly results on Mar 5. It has an Earnings ESP of +0.02% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco Wholesale Corporation COST is scheduled to release results on Mar 5. The company has an Earnings ESP of +0.20% and carries a Zacks Rank #2.

The Cooper Companies, Inc. COO has an Earnings ESP of +0.63% and a Zacks Rank of 3. The company is set to report results on Mar 5.

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