What happened
Shares of fiber optics company Clearfield, Inc. (CLFD 2.94%) fell as much as 15.2% in trading on Friday after reporting fiscal first-quarter 2023 financial results. Shares closed the day down 12.9%.
So what
Revenue was up 68% from a year ago to $85.9 million, and net income rose 37% to $14.3 million, or $1.00 per share. What got investor attention was backlog falling 17% from just a quarter ago to $136 million, which management said was in large part due to a return to normal ordering patterns.
Management did reaffirm fiscal 2023 sales guidance of between $380 million and $393 million with net-income guidance of $4.30 to $4.50 per share. The average analyst estimate was $4.31 per share in earnings, so this was in line with expectations.
Now what
Clearfield is hitting some bumps in getting the business back to a more normal cadence after the pandemic. But that doesn't mean it's not performing well. Earnings are expected to be strong this year, and the company is maintaining growth. Even the backlog number is deceptive because it's up 34% from a year ago.
Shares now trade for just 14 times this year's earnings estimate, which is a reasonable price for a company that's still growing. Today's reaction is likely worry about the backlog number, but that will ebb and flow over time. This looks like a buying opportunity for long-term investors.
