Oplink Communications Earnings Preview

Oplink Communications (Nasdaq: OPLK  ) beat estimates by $0.04 last quarter, and investors are hoping it can beat them again. The company will unveil its latest earnings Monday. Oplink Communications provides design, integration and optical manufacturing solutions for optical networking components and subsystems. Its products are designed to increase the bandwidth capacity of fiber-optic networks.

What analysts say:

• Buy, sell, or hold?: Analysts strongly back Oplink Communications, with three of four rating it a buy and the remainder rating it a hold. Analysts like Oplink Communications better than competitor Oclaro overall. That rating hasn't budged in three months as analysts have remained steadfast in their opinion of the stock.
• Revenue forecasts: On average, analysts predict $45.3 million in revenue this quarter. That would represent a rise of 16.6% from the year-ago quarter.
• Wall Street earnings expectations: The average analyst estimate is earnings of $0.17 per share. Estimates range from $0.16 to $0.17.

What our community says:
CAPS All-Stars are solidly behind the stock with 88.5% assigning it an "outperform" rating. The community at large agrees with the All-Stars with 88.3% granting it a rating of "outperform." Fools are bullish on Oplink Communications, though the message boards have been quiet lately with only 69 posts in the past 30 days. Oplink Communications' bearish CAPS rating of two out of five stars falls short of the Fool community sentiment.

Management:
Oplink Communications' profit has risen year over year by an average of more than fivefold. The company raised its gross margin by 3.4 percentage points in the last quarter. Revenue rose 59% while cost of sales rose 51% to $34.2 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter	Q3	Q2	Q1	Q4
Gross Margin	36.1%	36.7%	32.5%	31.8%
Operating Margin	16.1%	17.6%	12.9%	8.2%
Net Margin	15.3%	16.3%	11.2%	9.2%

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