Foolish Forecast: Ceragon's Emerging Growth

Wireless network gear maker and Motley Fool Hidden Gems recommendation Ceragon Networks (Nasdaq: CRNT  ) will start next week with its second-quarter results before the market opens on Monday. Here's some Foolish thoughts to chew on over the weekend.

What analysts say:

  • Buy, sell, or waffle? The analyst pool hasn't wavered much: Of the 12 analysts rating Ceragon, 10 still say buy and two say hold. The 1,509 members of the Motley Fool CAPS community who rate Ceragon are largely bullish, giving the company a top-notch five-star rating.
  • Revenue. On average, analysts predict quarterly sales of $49.4 million, 32% over the same quarter last year.
  • Earnings. Profits are expected to grow by about 18% to $0.13 per share.

What management says:
In Ceragon's last quarter, the company highlighted a regional shift in which U.S. customers, which include CellularOne and General Dynamics (NYSE: GD  ) , were not contributing as heavily to revenue. CEO Ira Palti noted, though, that "demand in the Asia Pacific and EMEA [Europe, the Middle East, and Africa] regions more than offset the recent weakness in North America." Though Palti remains steadfast that Ceragon is in a sweet spot riding the demand for higher bandwidth, carriers in the U.S. such as Sprint Nextel (NYSE: S  ) , Verizon (NYSE: VZ  ) , and AT&T (NYSE: T  ) haven't been knocking as frequently on Ceragon's door, with purchase orders in hand.

What management does:
Ceragon is delivering on its commitment to both growth and a lean operating structure, and it shows in its margins' fantastic upward trend.

Margins 

12/06

3/07

6/07

9/07

12/07

3/08

Gross

25.5%

26.5%

27.4%

29.1%

36.1%

35.9%

Operating

(6.2%)

(3.5%)

(1.5%)

0.2%

7.7%

7.7%

Net

(5.0%)

(2.6%)

(1.1%)

0.4%

8.1%

8.4%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Since noting strong demand from Asia Pacific and emerging markets last quarter, Ceragon has piled on more deployment deals for backhaul solutions in India, Mexico, and the Dominican Republic. And the company is noting that these are multimillion-dollar contracts and extensions to top-tier customers such as America Movil (NYSE: AMX  ) . While the WiMAX network ambitions of Clearwire and Intel (NYSE: INTC  ) may be slogging along in the U.S. at a less-than-desirable pace, emerging markets are racing to bring broadband wireless networks on line. With this level of market validation, it's likely the slack sales in the U.S. are only temporary.

More Foolish insight:

Ceragon Networks was selected by the Motley Fool Hidden Gems team for its great growth prospects. To see what other stocks our analysts are picking to beat the market, take a free 30-day trial.

Fool contributor Dave Mock never found counting sheep to be all that effective. He owns shares of Intel and is the author of The Qualcomm Equation. Sprint Nextel and Intel are Inside Value recommendations. The Fool has a drop-dead gorgeous disclosure policy.


Read/Post Comments (0) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 687100, ~/Articles/ArticleHandler.aspx, 10/23/2014 1:24:02 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement