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How Extreme Networks, Inc. Stock Rose 20% in January

By Anders Bylund - Feb 7, 2018 at 9:51PM

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...and lost it all in early February.

What happened

Shares of Extreme Networks (EXTR -0.83%) gained 20% in January, according to data from S&P Global Market Intelligence. The networking hardware specialist's big leap rested on its inclusion in a prestigious market index -- but the joy didn't last long.

So what

Extreme Networks was having a quietly positive month, trading just above the S&P 500 market index until Jan. 30. That's when the company was chosen to join the S&P SmallCap 600 market index, and the stock rose as much as 11.5% on the news.

The gains didn't last long. First, Extreme Networks was caught up in the general market meltdown of Feb. 5. Then the company reported second-quarter results, beating Wall Street's earnings targets while falling short on the top line. Share prices fell more than 14% on this mixed report, and Extreme Networks is now trading 7% lower year to date.

An enterprise-grade Ethernet switch, populated with bundles of colorful cables.

Image source: Getty Images.

Now what

Don't cry for Extreme Networks investors, though. At the end of January, share prices had nearly tripled in 52 weeks. It didn't take much of a miss to make some investors take some profits off the table.

Looking ahead, the buyout binge of 2017 has left Extreme Networks in position to challenge Hewlett-Packard Enterprise's (HPE 0.50%) Aruba Networks and Cisco Systems (CSCO -0.75%) for contracts across the enterprise networking sector. The stock may look expensive, trading at 730 times trailing earnings today, but the P/E ratio drops all the way to 10.6 if you use forward estimates instead.

Extreme Networks is going places, and I think we'll see it in these monthly top-performer lists again.

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Stocks Mentioned

Extreme Networks, Inc. Stock Quote
Extreme Networks, Inc.
$9.50 (-0.83%) $0.08
Cisco Systems, Inc. Stock Quote
Cisco Systems, Inc.
$43.77 (-0.75%) $0.33
Hewlett Packard Enterprise Company Stock Quote
Hewlett Packard Enterprise Company
$14.13 (0.50%) $0.07

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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