Momentum Stock: Finisar Corp. (NASDAQ:FNSR)

Finisar Corp. (NASDAQ:FNSR) reported earnings for the three months ended Jan2016 on March 10, 2016. The company earned $0.25 per share on revenue of $309.21M. Analysts had been modeling earning per share of $0.22 with $311.97M in revenue.

Finisar Corp. (FNSR) on March 10, 2016 announced financial results for its third quarter of fiscal 2016, ended January 31, 2016.

COMMENTARY

“Revenues for our third fiscal quarter were $309.2 million, approximately in line with the midpoint of our prior guidance range for the quarter of $300 to $320 million. Better than expected gross margins, due to favorable product mix, as well as lower than expected operating and other expenses, resulted in earnings per fully diluted share at the upper end of our prior guidance range,” said Jerry Rawls, Finisar’s Chief Executive Officer.

Financial Statement Highlights for the Third Quarter of Fiscal 2016:

• Revenues were $309.2 million, a decrease of $11.9 million, or (3.7)%, from $321.1 million in the preceding quarter.


• Sales of products for telecom applications increased by $2.6 million, or 2.9%, compared to the preceding quarter, primarily driven by growth in wavelength selective switches.


• Sales of products for datacom applications decreased by $14.5 million, or (6.2)%, compared to the preceding quarter, primarily driven by a decline in 40 gigabit transceivers, primarily as the result of reduced levels of capital spending by web 2.0 and hyperscale data center customers in anticipation of the roll out of next generation 100G QSFP28 transceivers.


• GAAP gross margin was 28.4% compared to 27.7% in the preceding quarter.


• Non-GAAP gross margin improved to 30.3% compared to 30.0% in the prior quarter as favorable product mix more than offset the impact of one month of annual telecom price negotiations, which typically take effect on January 1.


• GAAP operating expenses were $77.3 million compared to $79.7 million in the prior quarter.


• Non-GAAP operating expenses were $67.3 million compared to $68.0 million in the prior quarter.


• GAAP earnings per fully diluted share was $0.11 compared to $0.06 in the preceding quarter.


• Non-GAAP earnings per fully diluted share was $0.25 compared to $0.25 in the preceding quarter.

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Finisar Corp. earnings per share showed a decreasing trend of -89.7% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 120%.Analysts project EPS growth over the next 5 years at 15.7%. It has EPS annual growth over the past 5 fiscal years of 18.4% when sales grew 14.7. It reported 0.9% sales growth, and 589.5% EPS growth in the last quarter.

The stock is trading at $16.51, up 54.88% from 52-week low of $10.66. The stock trades down -28.65% from its peak of $23.14 and 14.78% above the consensus price target of $18.95. Its volume clocked up at 0.55 million shares which is lower than the average volume of 1.32 million shares. Its market capitalization currently stands at $1.78B.