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Why Extreme Networks Stock Jumped Today

By Anders Bylund – Nov 2, 2021 at 4:25PM

Key Points

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The high-speed networking expert posted robust third-quarter results.

What happened

Shares of Extreme Networks (EXTR -2.28%) rose as much as 13.7% on Tuesday, following the data networking company's release of strong results for the first quarter of fiscal year 2022.

So what

Extreme's first-quarter sales rose 14% year over year, landing at $268 million. Adjusted earnings more than doubled over the same period, jumping from $0.09 to $0.21 per diluted share. Your average analyst would have settled for earnings of roughly $0.16 per share on revenue near $257 million. Moreover, order bookings posted 45% year-over-year growth, up from 36% in the previous quarter.

A blue Ethernet cable twisted into the shape of a cartoon-style cloud.

Image source: Getty Images.

Now what

The company expects lower shipping fees in the coming quarters along with the top-line benefits of recent price increases across Extreme's product portfolio.

Management pointed to Extreme's growing market share in important sectors such as corporate campus networking and cloud-managed networks. The public cloud acts as the connective tissue between the distributed portions of a cloud-managed network solution, giving customers incredible flexibility while also placing high demands on the network's fundamental security.

Extreme Networks stock is trading at the bargain-bin valuation of 11 times forward earnings projections. At the same time, business is booming with double-digit increases on both the top and bottom lines. Though share prices have more than doubled with a price increase of 154% in 52 weeks, the fast-growing tech stock appears to have room for further gains today.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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