Investors hope Oplink Communications (Nasdaq: OPLK) will top analyst estimates once again after beating predictions by $0.04 in the previous quarter. The company will unveil its latest earnings on Thursday, August 18. Oplink Communications provides design, integration, and optical manufacturing solutions for optical networking components and subsystems. Its products are designed to increase the bandwidth capacity of fiber-optic networks.

What analysts say:

  • Buy, sell, or hold?: Analysts strongly back Oplink Communications, with three of four rating it a buy and the remainder rating it a hold. Analysts like Oplink Communications better than competitor Oclaro overall. Analysts' rating of Oplink Communications has stayed constant from three months prior.
  • Revenue Forecasts: On average, analysts predict $45.3 million in revenue this quarter. That would represent a rise of 16.6% from the year-ago quarter.
  • Wall Street Earnings Expectations: The average analyst estimate is earnings of $0.17 per share. Estimates range from $0.16 to $0.17.

What our community says:
CAPS All Stars are solidly backing the stock, with 88.5% granting it an "outperform" rating. The community at large concurs with the All Stars, with 88.4% assigning it a rating of "outperform." Fools are bullish on Oplink Communications, though the message boards have been quiet lately with only 69 posts in the past 30 days. Despite the majority sentiment in favor of Oplink Communications, the stock has a middling CAPS rating of three out of five stars.

Management:
Oplink Communications' profit has risen year over year by an average of more than fivefold over the past five quarters. The company increased its gross margin by 3.4 percentage points in the last quarter. Revenue rose 59% while cost of sales rose 51% to $34.2 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters:

Quarter

Q3

Q2

Q1

Q4

Gross Margin

36.1%

36.7%

32.5%

31.8%

Operating Margin

16.1%

17.6%

12.9%

8.2%

Net Margin

15.3%

16.3%

11.2%

9.2%

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