Ciena Corporation (CIEN -0.67%) stock raced ahead 22.7% through 10:55 a.m. ET Wednesday after the company beat analyst forecasts for fiscal Q3 2025 earnings.
Wall Street expected Ciena to report a $0.53-per-share "adjusted" profit for the quarter on sales of $1.17 billion. Ciena beat the sales forecast by $50 million and reported quarterly profit of $0.67 per share.
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Ciena Q3 earnings
The news wasn't quite as good as that sounds; the $0.67 per share was only an adjusted, non-GAAP number, and actual earnings as calculated according to generally accepted accounting principles (GAAP) were only $0.35 per share. Still, this was a 250% improvement over the $0.10 per share in GAAP profit Ciena earned a year ago.
So it was still pretty good news.
Even with operating expenses rising, up nearly 14% in the quarter, Ciena's sales are rising even faster, up 29% year over year, and this is driving tremendous profits for the company.
Is Ciena stock a buy?
And why? Communications networks are "fundamental to the underpinning, growth, and monetization of AI," argues CEO Gary Smith, and Ciena equipment helps to keep network speeds rising. Although Ciena is still just three-quarters through its fiscal 2025, Smith says his company has "visibility well into fiscal year 2026," and is "confident in the continued momentum of our business."
The big question for investors is whether Ciena will be able to repeat its Q3 performance. Right now, management says sales should exceed $1.2 billion in Q4, but that would be only about 11% growth and thus half the rate of increase seen in Q3. With Ciena stock trading for a heady 127 times trailing earnings and growth perhaps slowing, the stock's starting to look a bit too rich for my taste.
