On Thursday, Finisar (NASDAQ:FNSR) will release its quarterly report, and investors remain confident about the optical networking company's ability to keep up a strong pace of growth. Even though key customer Ciena (NYSE:CIEN) put up great numbers in its own earnings report, the big question is whether initiatives from major player Cisco Systems (NASDAQ:CSCO) like the Internet of Things can drive demand for optical networking equipment and components enough to keep Finisar's growth rate up.

Finisar has benefited immensely from the rise in demand for data-center applications, as its data-communications and telecom products are tailor-made to support efforts to speed up networks. With cutting-edge technology, Finisar has the capacity for huge gains -- but only if would-be customers are willing to spend money to enhance their own networks. Let's take an early look at what's been happening with Finisar over the past quarter and what we're likely to see in its report.

Source: Finisar.

Stats on Finisar

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$303.2 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

How much further can Finisar earnings climb?
In recent months, investors have gotten just a bit more optimistic about Finisar earnings, raising their fiscal 2015 estimates by about 1%. The stock has inched up by 4% since early March.

Finisar's fiscal third-quarter results in March showed just how much growth potential the fiber-optic specialist has. Revenue jumped 23% from the year-ago quarter, posting their sixth straight quarter of growth, and gross margins climbed by more than seven full percentage points, helping Finisar reverse a year-ago loss with a profit of $27 million. Adjusted earnings nearly tripled, and Finisar said that it expected solid results for the fiscal fourth quarter.


Source: Finisar.

What's particularly remarkable about Finisar is how far it has recovered recently. Late last year, Cisco Systems' decision to cut its own sales guidance led to a huge problem for Finisar, which got 17% of its total sales from Cisco in its 2013 fiscal year. Now, though, Finisar has been much more cautious to widen its funnel of business to get more customers, and that has paid off when companies like Ciena are able to have successes that feed into Finisar's pipeline.

That said, the relationship between Finisar and its peers is fluid. A few months ago, some speculated that Cisco Systems might go ahead and buy Finisar outright, especially given the expected rise in demand for optical components. Yet Finisar's huge array of new products has shareholders excited about the prospects for the company as an independent supplier, and many would be sorely disappointed to see Cisco or another buyer swoop in for anything less than an expensive premium to the stock's current levels.

In the Finisar earnings report, watch to see how the company does in light of recent strong results from Ciena. With Ciena expecting further purchases from telecom-equipment customers, Finisar stands to reap the benefits as well as long as buyers remain in a spending mood.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Cisco Systems. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.