As you can see they had phenomenal growth. They had growth of 112% this quarter but the stock was really shellacked. The reason for this is that they are predicting growth of 110 million at the mid range for next quarter. This will bring growth down to 57%. They also are predicting AEPS of 1.40 which is a 268% increase YOY. So does this seem that they stock should have given up 34% of its market cap. I think the market over corrected. The stock is growing Revenue at 57% next quarter and AEPS at 268% but yet is selling for a P/E of 22.98 at this time. For a forward adjusted earnings they have a P/E of 13.24. So what is scaring the market.
Management stated on the earnings calls that the move from 40G to 100G was accelerating faster than they predicted. They stated that their Biggest customer had slowed down on buying their sfp’s. The analyst on the call were asking if they had lost their biggest customer but management had assured them that they hadn’t lost the customer but that they had just slowed down. Management also assured that while sales had slowed their 100 gig were picking up and these had higher margins. This quarter 40G was 57% of Revenue and 100G was 39% of Revenue. They expect 100G to grow to be a bigger portion of Revenue than 40G by the end of the 3rd quarter or the beginning of the 4th quarter. As you can see their margins are growing. While they will be slightly down next quarter they are still in a respectable 40% range. Their customer are starting to qualify 200G sfp’s.
After looking at this quarter I thought the sell off was over done and purchased more shares at 71.95 but that seems to be a little early.
Thanks for presenting the numbers, Andy. Handy reference.
I, too, bought back a portion of my previously sold shares at < $70. I plan to buy more. If the price remains < $65, I’ll be able to repurchase my entire original holding at less than my initial entry price (after a wild/very profitable parabolic ride). This sector has a certain “casino” feel in the Market. One can visit StockTwits and witness rampant gambling behavior. Analyst opinions are all over the map. Orders come and go with little visibility given the big money is controlled by large corporations or governments (e.g., China). Even so, everyone knows the sector will be entering another MAJOR growth phase with the transition to 5G and an explosion of data that must be managed by an ever increasing number of data centers (heck, all you eCommerce fans REQUIRE this). There will be winners and losers. There will be profits and losses. So far, I’ve got three horses in the race (AAOI, ACIA and INFN). Keeping up with daily developments is a big time suck, but I’m genuinely fascinated by the sector.
Hi Putnid,
I think I need to be a lot more fluid with my trades in AAOI. I thought this quarter was going to be a big quarter (and it was) but I wasn’t think about the next quarter and they guided down which killed the stock. So I think you are doing a much better job of managing your position. I have two positions, one in Acia and the other in AAOI. I am down in Acia but still up on AAOI because my first position was at a low point.
I am out of INFN but I am thinking about ANET, they just had a great quarter. I am hesitant to get back into the equipment makers though because they can be tough to figure out on how they will grow. But Anet sells their software too and I am not sure how that is going but it might be why they are still doing good. I haven’t looked at ANET for awhile now though.
Funny thing, I am up in ACIA (still don’t know why it fared as well as it did after its ER).
I am out of ANET and thinking about buying more INFN. I’ve been a long-time Arista (ANET) owner. I was buying throughout the lawsuit kerfuffles, buying in the $50s and $60s. Did some swing trading as ANET traded within a $60 - $70 channel. Then it broke out fast at the start of the year. I began selling >$120. Sold too early (a character trait - sigh). I began selling because I felt ANET was overpriced. I expect the price to decline. If it declines enough, I’ll reestablish a position. Arista is a solid company.
INFN has not been a bad investment for me to date. I never bought at the highs, caught a number of favorable swing trades, and ended up with a healthy position at a reasonable ASP. Sold a profitable portion of my holding for >$12 not long ago. Thinking of buying those shares back, but I’m more in a “wait and see” mode.
