Leading optical transport network developer, Infinera Corporation INFN, is slated to release its first-quarter 2015 financial numbers on Apr 21, 2015, after market close.
Last quarter, Infinera delivered a robust 60.00% positive earnings surprise. Notably, the company has outpaced the Zacks Consensus Estimate in each of the trailing four quarters, with an impressive average earnings beat of 182.86%. Let’s see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Infinera is likely to beat earnings because it has the perfect combination of two key ingredients.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +20.00%. This is because the Most Accurate estimate stands at 6 cents, whereas the Zacks Consensus Estimate is pegged at 5 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: Infinera currently has a Zacks Rank #1 (Strong Buy). Note that stocks with Zacks Rank #1, 2 (Buy) or 3 (Hold) have a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
The combination of Infinera’s Zacks Rank #1 and +20.00% ESP makes us reasonably confident of a positive earnings beat at the company.
What is Driving the Better-than-Expected Earnings?
The company has announced its plans to acquire Transmode, a leader in metro packet-optical networking, for about $350 million. The deal, which is expected to be sealed in the third quarter of 2015, subject to regulatory approvals, should further strengthen Infinera’s position as a leader in the metro aggregation market.
Notably, in Dec 2014, Infinera started shipping Cloud Xpress – its solution for the metro cloud market. Management expects the company’s newly launched Cloud Xpress products and its metro cloud market transition to pave the way for long-term growth. Infinera’s Cloud Xpress system is expected to cut power usage by 50% compared to other metro cloud solutions.
Recently, Facebook, Inc. FB deployed the Infinera portfolio of products, which includes the DTN-X platform on its European network. Thus, the addition of DTN-X and DTN customers and strong 100G optical exposure combined with sustained focus on global expansion of its DTN-X platform are certain factors that are likely to impact the quarter favorably.
Nevertheless, the company needs to continually emphasize on the launch of new products and innovative services to counter stiff competition from its peers and sustain its position in the highly competitive digital optical networking market.
Stocks to Consider
Infinera is not the only company looking up this earnings season. Here are some other companies to consider as our model shows they also have the right combination of elements to post an earnings beat this quarter:
DigitalGlobe, Inc. DGI, with earnings ESP of +30.00% and a Zacks Rank #2.
Charter Communications, Inc. CHTR, with earnings ESP of +411.11% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment