Why Ciena (CIEN) Was Up, Then Down Today (Update)

Update (4:35 p.m.): Updated with YChart and Thursday market close information.

NEW YORK (TheStreet) -- Ciena  (CIEN) fell 3.55% to $24.46, down 90 cents from its previous close of $25.36, at the close of the trading day on Thursday.

The stock peaked at $27.16 for the day shortly after the market opened. The company, which provides Ethernet solutions for broadband service providers and telecommunications service providers, reported first-quarter results that surpassed expectations prior to the market's opening on Thursday.

The company reported earnings per share of 13 cents, excluding items, which beat the Capital IQ consensus estimate of 6 cents. Revenues rose 17.8% year over year to $533.7 million, which was just shy of the consensus estimate of $533.85 million but marked an increase from $453.1 million in the same quarter one year earlier. Adjusted operating margin was 5.9% compared to 5.6% one year ago.

Ciena also issued second-quarter revenue guidance of $540 to $570 million, which was in line with the consensus estimate of $561.41. The company also expects adjusted gross margin in the low 40s percent range and adjusted operating expenses in the $210 million range.

"We continue to benefit from the strategic decisions we've made to expand our role and reach in the market, driving more consistent performance and progress toward achieving our long-term operating targets," said President and CEO Gary B. Smith in the company's statement.

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

"We rate CIENA CORP (CIEN) 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 revenue growth, solid stock price performance and impressive record of earnings per share growth. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall."

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

  • The revenue growth came in higher than the industry average of 3.4%. Since the same quarter one year prior, revenues rose by 25.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 76.92% and other important driving factors, this stock has surged by 62.06% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • 42.87% is the gross profit margin for CIENA CORP which we consider to be strong. Regardless of CIEN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CIEN's net profit margin of -1.67% significantly underperformed when compared to the industry average.
  • Net operating cash flow has significantly decreased to $3.55 million or 66.46% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: CIEN Ratings Report
CIEN Chart

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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