Why Infinera (INFN) Stock Is Up Today

NEW YORK (TheStreet) -- Infinera (INFN) was gaining 6.45 to $9.38 Thursday after beating analysts' estimates for earnings and revenue in the first quarter.

For the first quarter Infinera reported earnings of 3 cents a share, beating analysts' expectations of a loss of 1 cent by 4 cents. Revenue grew 14.6% from the year-ago quarter to $142.81 million. Analysts surveyed by Thomson Reuters expected revenue of $140.46 million.

"Our first quarter performance was exceptionally strong in what is typically a soft quarter for our industry. We are benefitting from the continued investment cycle in 100G and network convergence. The favorable economics of our PIC-based architectures and the operational benefits of super-channels positions us as the industry recognized leader in the optical market," CEO Tom Fallon said in a press release.

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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 revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. 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 1.1%. Since the same quarter one year prior, revenues slightly increased by 8.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving 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 2.83, which clearly demonstrates the ability to cover short-term cash needs.
  • 44.50% is the gross profit margin for INFINERA CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -7.31% is in-line with the industry average.
  • 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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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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