Why Infinera (INFN) Is Soaring Today

NEW YORK (TheStreet) -- Infinera (INFN) soared 26.1% to $8.90 Thursday after an impressive quarterly earnings report.

In its fourth quarter earnings report Infinera reported break even earnings. Analysts surveyed by Thomson Reuters expected a loss of 2 cents a share for the quarter. The telecommunication company posted revenue of $139.09 million for the quarter, compared to estimates of $135.98 million.

"As we look ahead, we believe the opportunity for the DTN-X remains wide open with the 100G cycle still in its early stages," CEO Tom Fallon said in a statement. "For 2014, we plan to continue our focus on winning new deployments and gaining market share, while driving enhanced profitability, and we remain optimistic about our outlook over the short, intermediate and long-term."

TheStreet Ratings team rates INFINERA CORP as a "hold" with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate INFINERA CORP (INFN) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and compelling growth in net income. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • INFN's revenue growth has slightly outpaced the industry average of 23.6%. Since the same quarter one year prior, revenues rose by 26.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although INFN's debt-to-equity ratio of 0.26 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 3.33, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for INFINERA CORP is rather high; currently it is at 52.33%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, INFN's net profit margin of 2.35% significantly trails the industry average.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Communications Equipment industry and the overall market, INFINERA CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: INFN Ratings Report

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