What happened

Shares of LED maker Cree, Inc. (NASDAQ:CREE) jumped as much as 20.9% in trading Wednesday after the company reported fiscal first-quarter 2018 results. The company posted a surprise profit and said its business outlook may be getting better as well. At 3:55 p.m. EDT, shares were still up 16% for the day.

So what

Revenue fell 3% from a year ago to $360.4 million, but Cree's net income for the quarter was $4 million, or $0.04 per share on an adjusted basis. Analysts were expecting $361 million in revenue, so the top line was a bit disappointing -- but they also expected a loss of $0.03 per share, and the company easily beat that.

Hand holding an LED lightbulb in front of a blue background

Image source: Getty Images.

In the fiscal second quarter, management expects revenue of $340 million to $360 million with adjusted earnings of $0.01 to $0.04 per share. The company also said it will invest in Wolfspeed's electronics products after a sale of that subsidiary failed to go through.

Now what

Cree leapt over a low bar for investors in the fiscal first quarter, but that was enough to send shares higher today. There may have also been some low expectations, as adverse weather conditions reduced lighting investment in some of the United States' biggest markets, a headwind that won't last forever.

What will be more important than this earnings beat for long-term investors: a turnaround in revenue, and continuous improvement on the bottom line. Cree seems to take one step forward and two steps back from time to time, which is why I won't be jumping on a single earnings beat. I want to see a positive trend before jumping into this stock.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.