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Clearfield (CLFD - Free Report) is a Zacks Rank #1 (Strong Buy) that manufactures, markets, and sells standard and custom passive connectivity products to the fiber-to-the-premises, enterprises, and original equipment manufacturers markets in the United States and internationally.
While the markets have gone lower in 2022, CLFD has gone higher. Despite a big drop in price over the last month, the stock is still up over 10% on the year.
Obviously, Clearfield is doing something right, but in a market that is so negative, investors are asking if can the stock maintain its relative strength. And if it can hold up, should the bulls expect a move back to 2022 highs into the end of the year?
About the Company
Clearfield was founded in 1979 and is headquartered in Minneapolis,MN. It employs 250 people and has a market cap of $1.25 Billion.
Clearfield provides fiber protection, fiber management and fiber delivery solutions that enable rapid and cost-effective fiber-fed deployment throughout the broadband service provider space. The company has a strong competitive position as 5G and NG-PON2 technologies are rolled out to meet rapidly growing demand.
The stock has Zacks Style Scores of “F” in Growth and Value. However, a recent earnings beat has caught investors’ attention.
Q3 Earnings Beat
In late July, Clearfield reported a 37% EPS beat for Q3. The company saw Q3 revenues almost double year over year and raised its FY revenue outlook. FY22 revenues were taken to a range of $243-247M v the $218M expected.
Gross profit margin was down year over year, but their quarter over quarter backlog was up 16% to $157M.
The quarter saw new records for quarterly net sales and quarter end backlog.
Management commentated that they are “making meaningful progress on our ‘Now of Age’ strategic plan to expand our capacity and rapidly scale our business to meet the significant market demand for high-speed broadband.”
Investors cheered the news, sending the stock from $85 to $100 in just a few days. This move over 15% higher broke all-time highs and the stock eventually hit $130 before pulling back.
Analyst Estimates
Over the last 60 days, estimates have been trending higher. For the current quarter, we have seen a move from $0.70 to $0.80, or 14%.
Looking down the road, analysts see the momentum continuing. Over the last 60 days, the current year has seen estimates go from $2.77 to $3.13, or 13%. For next year, analysts have taken numbers 16% higher.
Since earnings the stock also got positive news that it would be added to the S&P Small Cap 600.
The Technicals
The stock started to gain traction in 2020, slowly moving off the COVID lows and closing out the year with almost a 100% gain. In 2021 the stock broke out and closed the year up about 250%.
Like most tech in 2022, the stock initially took a big hit and dropped 50% in the first month of the year. But from there, the series of earnings beats fueled the stock back to all-time highs and beyond.
CLFD hit an August and 2022 high of $130.01 to put the stock up over 50% on the year. This while most stocks suffered their worst performance in a decade.
The recent market sell-off brough too much selling pressure and the CLFD fell back under the $100 level.
This move lower broke the 50-day moving average, but there are still many support areas that bulls should eye.
The $91 level is the 50% retracement from June lows to August highs. $82.25 is the 61.8% retrace from that same setup. And if the market were to severely weaken, bulls might get lucky enough to get the 200-day moving average, which is way down at $72.
Bottom Line
Clearfield has shown investors relative strength all year, so the current pullback should be viewed as a buying opportunity.
I would expect the current support levels to hold and for the stock to gain some momentum back into the end of the year. If the market can rally into Q4 and Clearfield earnings can impress again, look for CLFD bulls to shoot for those all-time highs.
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Bull of the Day: Clearfield (CLFD)
Clearfield (CLFD - Free Report) is a Zacks Rank #1 (Strong Buy) that manufactures, markets, and sells standard and custom passive connectivity products to the fiber-to-the-premises, enterprises, and original equipment manufacturers markets in the United States and internationally.
While the markets have gone lower in 2022, CLFD has gone higher. Despite a big drop in price over the last month, the stock is still up over 10% on the year.
Obviously, Clearfield is doing something right, but in a market that is so negative, investors are asking if can the stock maintain its relative strength. And if it can hold up, should the bulls expect a move back to 2022 highs into the end of the year?
About the Company
Clearfield was founded in 1979 and is headquartered in Minneapolis,MN. It employs 250 people and has a market cap of $1.25 Billion.
Clearfield provides fiber protection, fiber management and fiber delivery solutions that enable rapid and cost-effective fiber-fed deployment throughout the broadband service provider space. The company has a strong competitive position as 5G and NG-PON2 technologies are rolled out to meet rapidly growing demand.
The stock has Zacks Style Scores of “F” in Growth and Value. However, a recent earnings beat has caught investors’ attention.
Q3 Earnings Beat
In late July, Clearfield reported a 37% EPS beat for Q3. The company saw Q3 revenues almost double year over year and raised its FY revenue outlook. FY22 revenues were taken to a range of $243-247M v the $218M expected.
Gross profit margin was down year over year, but their quarter over quarter backlog was up 16% to $157M.
The quarter saw new records for quarterly net sales and quarter end backlog.
Management commentated that they are “making meaningful progress on our ‘Now of Age’ strategic plan to expand our capacity and rapidly scale our business to meet the significant market demand for high-speed broadband.”
Investors cheered the news, sending the stock from $85 to $100 in just a few days. This move over 15% higher broke all-time highs and the stock eventually hit $130 before pulling back.
Analyst Estimates
Over the last 60 days, estimates have been trending higher. For the current quarter, we have seen a move from $0.70 to $0.80, or 14%.
Looking down the road, analysts see the momentum continuing. Over the last 60 days, the current year has seen estimates go from $2.77 to $3.13, or 13%. For next year, analysts have taken numbers 16% higher.
Since earnings the stock also got positive news that it would be added to the S&P Small Cap 600.
The Technicals
The stock started to gain traction in 2020, slowly moving off the COVID lows and closing out the year with almost a 100% gain. In 2021 the stock broke out and closed the year up about 250%.
Like most tech in 2022, the stock initially took a big hit and dropped 50% in the first month of the year. But from there, the series of earnings beats fueled the stock back to all-time highs and beyond.
CLFD hit an August and 2022 high of $130.01 to put the stock up over 50% on the year. This while most stocks suffered their worst performance in a decade.
The recent market sell-off brough too much selling pressure and the CLFD fell back under the $100 level.
This move lower broke the 50-day moving average, but there are still many support areas that bulls should eye.
The $91 level is the 50% retracement from June lows to August highs. $82.25 is the 61.8% retrace from that same setup. And if the market were to severely weaken, bulls might get lucky enough to get the 200-day moving average, which is way down at $72.
Bottom Line
Clearfield has shown investors relative strength all year, so the current pullback should be viewed as a buying opportunity.
I would expect the current support levels to hold and for the stock to gain some momentum back into the end of the year. If the market can rally into Q4 and Clearfield earnings can impress again, look for CLFD bulls to shoot for those all-time highs.