What happened

Shares of Finisar (NASDAQ:FNSR) fell 11.3% in August 2017, according to data from S&P Global Market Intelligence. The maker of optical communication components didn't present any huge news of its own last month, but share prices took a big haircut based on gloomy market forecasts from sector peers Applied Optoelectronics (NASDAQ:AAOI), Infinera (NASDAQ:INFN), and Ciena (NYSE:CIEN).

So what

The month started off on a sour note. On Aug. 3, both long-range networking expert Infinera and high-speed transceiver maker Applied Optoelectronics published their latest quarterly results. Both companies beat Wall Street's expectations, but both also pointed to modest growth in the next report due to soft market trends. Applied Optoelectronics' shares plunged 26% lower the next day, followed by a 17% drop in Infinera's stock value. Finisar simply followed suit with a 7% drop, as investors saw growth prospects drying up across the optical networking industry as a whole.

Later, telecom-grade optical networking specialist Ciena published another solid quarterly report -- complete with a weak revenue guidance target for the current operating period. Ciena shares fell 9% on that news, taking Finisar along for another 3.5% drop.

A technician attaches a fiber-optic cable among many others in a telecom network switch.

Image source: Getty Images.

Now what

Finisar presented a quarterly update of its own in early September, but the report only underscored the market readings investors had already gleaned from peers like Infinera and Applied Optoelectronics. Like everyone else, the company saw strong demand for its fastest networking components and lower interest in aging legacy products. And like everyone else, Finisar is scrambling to update its manufacturing operations in order to keep up with hefty demand for a new generation of optical networking products.

As a whole, the industry is moving along to the next era of high-speed networking a little bit faster than anyone had expected at the start of 2017. The missing volume of telecom and data center orders should come roaring back once Finisar and friends are able to crank out enough high-speed parts to keep the order pipeline flowing.

Finisar's management is clearly confident in strong long-term business trends. The company is currently building another manufacturing facility in Wuxi, China, that should start producing components by the summer of 2018. At this point, Finisar investors are staring down a handful of short-term speed bumps but also a great outlook for 2018 and beyond. Telecoms should start rolling out their 5G wireless networks as soon as the supporting technology is ready, and data center customers can't get enough of those 100-gigabit transceivers.

Meanwhile, Finisar shares are trading at a frugal 9.8 times trailing earnings and 13 times free cash flows. Value-conscious investors should take a closer look at Finisar as an attractive long-term play right now.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Infinera. The Motley Fool has a disclosure policy.