Shares of San Jose-based high-speed connectivity solutions provider Credo Technology Group (CRDO 6.34%) stock jumped 24.5% through 10:10 a.m. ET this morning after beating analyst forecasts last night.
Heading into its fiscal fourth quarter of 2025, analysts forecast Credo would earn only $0.27 per share on less than $160 million in sales. In fact, Credo reported last night, it earned $0.35 per share, adjusted for one-time items, and sales were $170 million, for the period ended May 3.
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Credo's Q4 earnings
Not all the news is good. Sales surged nearly 180% year over year, which is great. Earnings as calculated according to generally accepted accounting principles (GAAP) were up only 25%, however, despite the impressive "adjusted" earnings beat.
Actual GAAP profits for the quarter were only $0.20 -- not $0.35.
Still, CEO Bill Brennan said he was "proud" of the company's achievements in 2025. For the full year, sales grew 126%, while cost of revenue grew only 109%, improving the company's gross profit margin. And operating costs grew only 57%, improving the company's operating profit margin even more.
For both the quarter and the year, Credo flipped from operating and net losses to operating and net profits. GAAP profit for the year was $0.29 per share.
Is Credo stock a buy?
So no wonder investors are pleased. And it didn't hurt that Credo guided investors to expect further sales growth (about $190 million, triple last year's Q1 sales) and a further improved gross margin (about 64.5%) in fiscal Q1 2026, currently underway.
At a valuation of more than 260 times trailing earnings, Credo stock is anything but a cheap stock. But if it keeps growing sales at its current pace, and expanding profit margins besides, this stock could still be a good growth stock -- and a buy.
