The market will get to hear the latest from Motley Fool Hidden Gems recommendation and wireless network solutions provider Ceragon Networks (Nasdaq: CRNT) this Friday. Let's see what may become of earnings in Ceragon's first quarter.
What analysts say:
- Buy, sell, or waffle? Of 12 analysts rating Ceragon, 10 say buy and two give it a hold rating. The company holds a top-notch five-star stock rating in the Motley Fool CAPS community, with more than 1,420 opinions given.
- Revenue. On average, analysts predict quarterly sales to rise 36% over the same quarter last year, to $46.2 million.
- Earnings. Profits are expected to grow even faster, to $0.13 per share.
What management says:
With a stock that's been trending downward over the past several months, many investors -- including this Fool -- have been wondering what's going on at Ceragon. But as we often emphasize here at the Fool, the stock doesn't tell you anything fundamentally about a company, which is why you shouldn't base decisions on stock movement.
Little has changed in outlook for the company as service providers such as Verizon Wireless -- a joint venture of Verizon Communications (NYSE: VZ) and Vodafone -- and AT&T (NYSE: T) will be driving demand for broadband backhaul solutions. In its last earnings report, Ceragon President and CEO Ira Palti noted that "the primary growth drivers for high-capacity wireless backhaul remain in place and we have a large pipeline of opportunities. We are looking forward to another year of growth in 2008."
What management does:
In the recent quarter, margins remained strong as the company kept a lean structure.
|
9/06 |
12/06 |
3/07 |
6/07 |
9/07 |
12/07 | |
|---|---|---|---|---|---|---|
|
Gross |
34.9% |
25.5% |
26.5% |
27.4% |
29.1% |
36.1% |
|
Operating |
2.3% |
(6.2%) |
(3.5%) |
(1.5%) |
0.2% |
7.7% |
|
Net |
(4.0%) |
(5.0%) |
(2.6%) |
(1.1%) |
0.4% |
8.1% |
One Fool says:
Ceragon's growth potential is strongly tied to the broadband upgrade cycle that has telecom operators around the world boosting capacity in their networks. Uncertainty about the pace of Clearwire (Nasdaq: CLWR) and Sprint Nextel's (NYSE: S) WiMAX rollout has hurt Ceragon, but lackluster outlooks from other network equipment providers such as Nokia (NYSE: NOK) and Siemens' joint venture and Alcatel-Lucent (NYSE: ALU) have also had investors hedging on Ceragon's prospects.
But network expansion concerns are near-term in nature -- adding broadband capacity to wireless networks around the world is just a matter of when. So the long-term possibilities with Ceragon are still there if the company can position itself to capture a good portion of this business, as it has done in the past.
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