Ciena (CIEN) To Report Q3 Earnings: What's In The Offing?

Ciena Corporation (NYSE:CIEN) is scheduled to report third-quarter fiscal 2019 financial results (ended Jul 31, 2019) before the opening bell on Sep 5. In the last reported quarter, the company delivered a positive earnings surprise of 20%. Markedly, Ciena surpassed the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average beat being 18.8%.

The company is likely to report higher revenues year over year on the back of increased sales in all major product segments and customer verticals, resulting from gains in market share. Whether this can result into an earnings beat remains to be seen.

Proper execution of operational strategies coupled with a strong set of favorable industry dynamics has benefitted Ciena’s business. Let’s find out how things are shaping up prior to the announcement.

Factors at Play

Ciena continues to strengthen its competitive position particularly with its focused investments in Optical Packets and Blue Planet automation software. The company is consistently achieving technology leadership across its portfolio and continues to build a diversified customer base in high-growth markets.

FiberLight, a long-haul fiber transport service provider, selected automation software from Blue Planet, a division of Ciena, to improve service delivery process across its multi-vendor network. FiberLight deployed Blue Planet Inventory and Blue Planet Multi-Domain Service Orchestration to automate the rapid turn-up and delivery of the on-demand services of its customers.

In the fiscal third quarter, management expects to deliver revenues in the range of $915 million to $945 million and adjusted gross margin in the 42% to 43% range. The Zacks Consensus Estimate for total revenues stands at $931 million, indicating an increase from $819 million reported in the year-earlier quarter. Adjusted earnings per share are pegged at 57 cents. The company reported earnings of 48 cents a year ago.

What Our Model Says

Our proven model does not conclusively show that Ciena is likely to beat earnings estimates this quarter as it does not possess one of the two key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you’ll see below:

Earnings ESP: Ciena’s Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00% as both are pegged at 57 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Ciena Corporation Price and EPS Surprise

Zacks Rank: Ciena currently has a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% Earnings ESP makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Stocks to Consider

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Zumiez Inc. (NASDAQ:ZUMZ) with an Earnings ESP of +12.50% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

General Mills, Inc. (NYSE:GIS) with an Earnings ESP of +0.37% and a Zacks Rank #2.

Lululemon Athletica Inc. (NASDAQ:LULU) with an Earnings ESP of +1.77% and a Zacks Rank #3.

Legalizing THIS Could Be Even Bigger than Marijuana

Americans spend an estimated $150 billion in this industry every year… more than twice as much as they spend on marijuana.

Now that 8 states have fully-legalized it (with several more states following close behind), Zacks has identified 5 stocks that could soar in response to the powerful demand. One industry insider described the future as “mind-blowing” – and early investors can still get in ahead of the surge.

See these 5 “sin stocks” now >>