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Why CommScope Holding Co. Shares Soared

By Brian D. Pacampara, CFA – Feb 21, 2014 at 1:26PM

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Is this meaningful or just another movement?

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of CommScope Holding (COMM -1.09%) roared 20% today after the network infrastructure specialist's quarterly results and outlook topped Wall Street expectations.

So what: The stock has soared in recent months on signs of stabilizing demand, and today's fourth-quarter results -- adjusted earnings per share of $0.30 on sales of $846.6 million versus the consensus of $0.32 and $820 million -- coupled with upbeat guidance only reinforces those good vibes. In fact, operating margin expanded 200 basis points over the year-ago period to 16.7%, suggesting that CommScope's competitive position is steadily strengthening.

Now what: For the full-year 2014, management now expects adjusted earnings to grow by double digits on a mid-single-digit increase in sales, both well above Wall Street's view. "Wireless operators continue to invest in their networks as customers seek out a high quality, ubiquitous mobile broadband experience," said President and CEO Eddie Edwards in a press release. "We believe our industry-leading RF product portfolio, such as our recently announced Andrew SiteRise pre-assembled tower-top cellular solution and small cell distributed antenna solutions, uniquely positions CommScope to address the increasingly complex requirements of wireless networks." Of course, with the stock now up a whopping 50% from its late-October IPO, I'd wait for some the excitement to fade before jumping in.

Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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CommScope Holding Company, Inc. Stock Quote
CommScope Holding Company, Inc.
COMM
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