Despite threats from telecommunication and data communication rivals like JDS Uniphase (JDSU) and Avago Technologies (AVGO), Finisar's strong product portfolio has spurred widespread demand from, among others, AT&T (T), which relies on Finisar's components to build out its high-speed LTE networks.
Finisar's product differentiation continues to be a strong advantage, culminating in a March quarter that delivered year-over-year revenue and profit gains of 23.4% and 175%, respectively. Its shares closed Tuesday around $25, up 4.5% for the year to date.
Not only has Finisar gained meaningful market share, management has now shown -- on a consistent basis -- it can convert Finisar's product advantage into significant free cash flow. With that in mind, investors would be wise to get in on the action now before another company -- say, Cisco (CSCO) -- decides to buy it.
On Thursday, the Street will be looking for 38 cents in earnings per share on revenue of $303.92 million, representing a year-over-year earnings and revenue increases of 90% and 25%, respectively. These are not typos. Very few companies within the optical equipment space have performed as well as Finisar in the past two quarters.