Infinera (INFN) To Report Q4 Earnings: What's In Store?

Infinera Corp. (NASDAQ:INFN) is slated to report fourth-quarter 2017 results on Feb 7, after the market closes. The company is a provider of digital optical networking systems to telecommunications carriers, cable operators and other service providers worldwide.

Infinera has an impressive earnings surprise history. The company’s bottom line beat the Zacks Consensus Estimate in three of the previous four quarters, with an average positive surprise of 11.30%.

Let’s see how things are shaping up for this announcement.

Factors at Play

Infinera portrays a dismal price performance in the past six months. The stock has declined 32.4% against the industry’s gain of 20.6%.

Moreover, stiff competition from peers like Lantronix, Extreme Networks (NASDAQ:EXTR) , NETGEAR (NASDAQ:NTGR) and Brocade Communications Systems in the digital optical networking market is a concern. This might hamper the company’s fourth-quarter results.

Meanwhile, we are impressed with Infinera’s strategic business moves which include new launches and alliances. Different network service providers are merging with the company for the deployment of the Infinera Cloud Xpress, regionally and globally, to reach out to customers with higher scalability and reliability. Online streaming service provider, Netflix (NASDAQ:NFLX) , has deployed the Infinera Cloud Xpress 2 to expand delivery capacity for streaming videos.

Meanwhile, the company introduced the Infinera Instant Network, the next generation of software defined capacity (“SDC”) for cloud scale networks. The launch is expected to meet the needs of the emerging 5G mobile services, the Internet of Things (IoT), video streaming, Ethernet and cloud-based on-demand business services. Infinera’s decision to power cloud scale networks will boost its cloud suite. We believe that this will help the company improve the top line and lend it a competitive edge in the to-be-reported quarter.

Further, Infinera collaborated with CenturyLink to deliver 2.5 terabits per second of capacity to connect research and education community around the world, leveraging the CenturyLink core network.

Earnings Whispers

Our proven model does not show that Infinera is likely to beat estimates this quarter. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.

Zacks ESP: Infinera has an Earnings ESP of 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 13 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Infinera has a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Key Pick

CenturyLink (NYSE:CTL) from the broader Computer and Technology sector has the right combination of elements to post an earnings beat in fourth-quarter 2017 results, slated to release on Feb 14. CenturyLink has an Earnings ESP of +14.87% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company’s sales for fourth-quarter 2017 and first-quarter 2018 are estimated to increase 32.6% and 42.9%, respectively.

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