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Category: Stock Market and Ciena
Date: 5 September 2019 Stock Price: $41.20 We take a look at the 3rd quarter earnings for their 2019 fiscal year of Ciena, the networking technology group
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About Ciena
Ciena (NYSE: CIEN) is a networking systems, services and software company. We provide solutions that help our clients create the Adaptive Network™ in response to the constantly changing demands of their users. By delivering best-in-class networking technology through high-touch consultative relationships, we build the world’s most agile networks with automation, openness and scale.
Financial overview of Ciena's latest earnings report
Numbers we are interested in for the quarter:
- Total revenue: $960.6 million (up from $818.81 million for the same quarter of the previous year)
- Cost of goods sold : $536.254 million (up from $467.274 million for the same quarter of the previous year)
- Net income: $86.749 million (up from $50.840 million for the same quarter of the previous year)
- Diluted earnings per share: $0.55 (up from $0.34 for the same quarter of the previous year)
- Diluted shares in issue: 157.455 million (down from the 159.998 million for the same quarter of the previous year)
- Cash and cash equivalents: $723.229 million
- Cash and cash equivalents per share: $4.59
- Cash and cash equivalents makes up 11.14% of Ciena's current market capital
- Cash and cash equivalents makes up 19.15% of Ciena's total assets
- Inventories: $ 356.818 million
- Inventories makes up 9.5% of the Ciena's total assets
- Accounts receivables: $798.884 million
- Accounts receivables makes up 21.15% of Ciena's total assets.
- Cash generated from operations: $173.103 million
- Cash generated from operations per share: $1.10
- Total stockholders equity: $2.119 billion
- Stockholders equity per share: $13.45
- Stockholders equity per share: $13.45
Ciena's management commentary on the results and earnings guidance
HANOVER, Md.--(BUSINESS WIRE)-- Ciena® Corporation (NYSE: CIEN), a networking systems, services and software company, today announced unaudited financial results for its fiscal third quarter ended July 31, 2019.
"We delivered another quarter of outstanding financial results as we benefit from our strong competitive position within the industry and continue to gain market share," said Gary Smith, President and CEO, Ciena. "Looking ahead, fiscal 2019 will be an extraordinary year for Ciena, including substantial revenue growth and increased profitability."
For the fiscal third quarter 2019, Ciena reported revenue of $960.6 million as compared to $818.8 million for the fiscal third quarter 2018. Ciena's GAAP net income for the fiscal third quarter 2019 was $86.7 million, or $0.55 per diluted common share, which compares to a GAAP net income of $50.8 million, or $0.34 per diluted common share, for the fiscal third quarter 2018.
Ciena's adjusted (non-GAAP) net income for the fiscal third quarter 2019 was $112.3 million, or $0.71 per diluted common share, which compares to an adjusted (non-GAAP) net income of $74.3 million, or $0.48 per diluted common share, for the fiscal third quarter 2018.
- Q3 Revenue: $960.6 million, increasing 17.3% year over year
- Q3 Net Income per Share: $0.55 GAAP; $0.71 adjusted (non-GAAP)
- Share Repurchases: Repurchased approximately 1.1 million shares of common stock for an aggregate price of $45.4 million during the quarter
"We delivered another quarter of outstanding financial results as we benefit from our strong competitive position within the industry and continue to gain market share," said Gary Smith, President and CEO, Ciena. "Looking ahead, fiscal 2019 will be an extraordinary year for Ciena, including substantial revenue growth and increased profitability."
For the fiscal third quarter 2019, Ciena reported revenue of $960.6 million as compared to $818.8 million for the fiscal third quarter 2018. Ciena's GAAP net income for the fiscal third quarter 2019 was $86.7 million, or $0.55 per diluted common share, which compares to a GAAP net income of $50.8 million, or $0.34 per diluted common share, for the fiscal third quarter 2018.
Ciena's adjusted (non-GAAP) net income for the fiscal third quarter 2019 was $112.3 million, or $0.71 per diluted common share, which compares to an adjusted (non-GAAP) net income of $74.3 million, or $0.48 per diluted common share, for the fiscal third quarter 2018.
Ciena (NYSE: CIEN) stock price history
The image below shows the stock price history of Ciena for the last 5 years. 5 years ago the stock was trading at $19.45 a share. Today it is trading at $41.20. So the stock has grown by over 100% over the last 5 years. Handsome returns provided to shareholders over this period. Looking at the current stock price we also see it is trading at a lot closer to its 52 week high of $46.78 than it is to its 52 week low of $28.23 which to us is an indication that the short term sentiment towards the stock is more positive than it is negative.
Ciean (NYSE: CIEN) latest stock valuation
So based on Ciena's latest earnings report what do we see as the target price for Ciena? Our valuation models provided a target price (full value price) on Ciena stock of $38.90. We therefore believe the stock is full priced to a touch overvalued and would not recommend long term fundamental value buyers buy into Ciena stock at its current price, but rather at levels about 10% lower than our target price, so closer to $34 level.