Why CommScope Holding Company Inc Shares Popped Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of CommScope Holding Company, (NASDAQ: COMM  ) jumped 10% Friday after the communications infrastructure specialist raised its forward guidance.

So what: Citing strength in its wireless business, CommScope now expects first-quarter sales of $900 million to $925 million, the midpoint of which represents 13% growth over the same year-ago period. That should translate to 29% growth in adjusted earnings per share to a range of $0.43 to $0.47.

Now what: For reference, CommScope soared 20% exactly one month ago when it reported better-than-expected fourth-quarter results. At the time, management told investors to expect Q1 revenue of $860 million to $900 million, and adjusted earnings per share of $0.36 to $0.40. Though shares pulled back slightly after that pop, today's jump means CommScope investors are sitting on a year-to-date gain of roughly 29%.

Even so, I think the stock actually looks cheap trading right around 1.2 times last year's sales and 12.9 times next year's estimated earnings. Keeping in mind those estimates are likely to increase -- and if CommScope can maintain its momentum over the long run -- there's no reason it can't continue rewarding patient investors from here.

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Related Tickers

11/28/2014 1:00 PM
COMM $22.20 Down -0.31 -1.38%
CommScope Holding… CAPS Rating: No stars

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