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Why Is Ciena (CIEN) Down 0.8% Since Last Earnings Report?
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A month has gone by since the last earnings report for Ciena (CIEN - Free Report) . Shares have lost about 0.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Ciena 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 catalysts.
Ciena Q2 Earnings & Revenues Top Estimates
Ciena reported second-quarter fiscal 2023 (ended Apr 29) results, wherein adjusted earnings of 74 cents per share beat the Zacks Consensus Estimate of 60 cents. Earnings improved 48% year over year.
Quarterly total revenues were up 19.3% year over year to $1,132.7 million. The top line surpassed the Zacks Consensus Estimate by 4.4%.
Non-telco customers contributed nearly 42% to revenues in the reported quarter. One customer represented 10.9% of total revenues in the fiscal second quarter.
However, the company has highlighted that certain buyers including large North American service-provider customers are pushing out orders into subsequent quarters as they scrutinize their budgets amid economic troubles. Ciena lowered its revenue guidance for fiscal 2023. It now expects revenue growth in the range of 18-22% compared with the earlier guided range of 20-22%.
Segment Results
Total revenues in Networking Platforms (80.8% of total revenues) increased 24.6% year over year to $914.9 million.
Platform Software and Services’ revenues (6.1%) totaled $69.4 million, up 0.4% from the prior-year quarter’s levels.
Blue Planet Automation Software and Services’ revenues (1.8%) improved 21.9% to $20.6 million.
Total revenues in Global Services (11.3%) were $127.8 million, down 0.7% year over year.
Region-wise, revenues in the Americas were $794.4 million, up 13.4% year over year. Europe, the Middle East and Africa generated $173.4 million revenues, up 19.5% from the prior-year quarter’s levels. Revenues in the Asia Pacific totaled $164.9 million, up 59.6% from the prior-year quarter’s figure.
Other Details
Non-GAAP adjusted gross margin was 43.7% compared with 43% in the year-ago quarter. Adjusted operating expenses were $338.1 million, up 12.3% from the prior-year quarter’s levels.
Non-GAAP adjusted operating margin was 13.8% compared with 11.3% in the prior-year quarter. Non-GAAP adjusted EBITDA increased 39.7% year over year to $180.6 million.
Cash Flow & Liquidity
For the quarter ended Apr 29, Ciena’s net cash generated from operating activities was $230 million compared with $106 million in the prior-year quarter.
As of Apr 29, the company had $1.34 billion in cash and investments and $1,546.4 million of net long-term debt.
Guidance
For the third quarter of fiscal 2023, management expects revenues in the range of $1-$1.08 billion. The adjusted gross margin is estimated to be low 40%. Adjusted operating expenses are estimated to be $335 million.
For fiscal 2023, adjusted gross margin is estimated to be between 42% and 44%. Adjusted operating expenses are now estimated to be $1.33 billion, slightly higher than the previous forecast. This is mainly due to increasing investments for TAM expansion, noted the company.
CIEN plans to repurchase shares worth $250 million in fiscal 2023. It repurchased $500 million worth of shares in fiscal 2022.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -30.44% due to these changes.
VGM Scores
At this time, Ciena has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Ciena has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Ciena (CIEN) Down 0.8% Since Last Earnings Report?
A month has gone by since the last earnings report for Ciena (CIEN - Free Report) . Shares have lost about 0.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Ciena 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 catalysts.
Ciena Q2 Earnings & Revenues Top Estimates
Ciena reported second-quarter fiscal 2023 (ended Apr 29) results, wherein adjusted earnings of 74 cents per share beat the Zacks Consensus Estimate of 60 cents. Earnings improved 48% year over year.
Quarterly total revenues were up 19.3% year over year to $1,132.7 million. The top line surpassed the Zacks Consensus Estimate by 4.4%.
Non-telco customers contributed nearly 42% to revenues in the reported quarter. One customer represented 10.9% of total revenues in the fiscal second quarter.
However, the company has highlighted that certain buyers including large North American service-provider customers are pushing out orders into subsequent quarters as they scrutinize their budgets amid economic troubles. Ciena lowered its revenue guidance for fiscal 2023. It now expects revenue growth in the range of 18-22% compared with the earlier guided range of 20-22%.
Segment Results
Total revenues in Networking Platforms (80.8% of total revenues) increased 24.6% year over year to $914.9 million.
Platform Software and Services’ revenues (6.1%) totaled $69.4 million, up 0.4% from the prior-year quarter’s levels.
Blue Planet Automation Software and Services’ revenues (1.8%) improved 21.9% to $20.6 million.
Total revenues in Global Services (11.3%) were $127.8 million, down 0.7% year over year.
Region-wise, revenues in the Americas were $794.4 million, up 13.4% year over year. Europe, the Middle East and Africa generated $173.4 million revenues, up 19.5% from the prior-year quarter’s levels. Revenues in the Asia Pacific totaled $164.9 million, up 59.6% from the prior-year quarter’s figure.
Other Details
Non-GAAP adjusted gross margin was 43.7% compared with 43% in the year-ago quarter. Adjusted operating expenses were $338.1 million, up 12.3% from the prior-year quarter’s levels.
Non-GAAP adjusted operating margin was 13.8% compared with 11.3% in the prior-year quarter. Non-GAAP adjusted EBITDA increased 39.7% year over year to $180.6 million.
Cash Flow & Liquidity
For the quarter ended Apr 29, Ciena’s net cash generated from operating activities was $230 million compared with $106 million in the prior-year quarter.
As of Apr 29, the company had $1.34 billion in cash and investments and $1,546.4 million of net long-term debt.
Guidance
For the third quarter of fiscal 2023, management expects revenues in the range of $1-$1.08 billion. The adjusted gross margin is estimated to be low 40%. Adjusted operating expenses are estimated to be $335 million.
For fiscal 2023, adjusted gross margin is estimated to be between 42% and 44%. Adjusted operating expenses are now estimated to be $1.33 billion, slightly higher than the previous forecast. This is mainly due to increasing investments for TAM expansion, noted the company.
CIEN plans to repurchase shares worth $250 million in fiscal 2023. It repurchased $500 million worth of shares in fiscal 2022.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -30.44% due to these changes.
VGM Scores
At this time, Ciena has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Ciena has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.