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Clearfield, Inc. Message Board

  • passiveinvestor1961 passiveinvestor1961 May 21, 2012 1:32 PM Flag

    The Valuation Was Just Too High

    When CLFD was heading to the $8's, there was certain trouble head. Sure, nice company, cash a plenty. The problem is the niche they serve. Fiber optic connectors are all part of a commodity based business. Nice niche but limited growth.Enormous competition. As government funding tails off, and it is and will, the opprotunity for subsidized groth also tails off. In the high $7's, CLFD was a lot of hat and no cows. P

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    • "Fiber optic connectors are all part of a commodity based business."

      Gross profit margins average >40% for the past few years.

      Commodity margins are half that.

      Obviously they add enough value that customers are willing to pay their prices.


    • while I won't disagree that the price got a bit ahead of itself last summer - the increase in PPS had more to due with the growth %s they were posting. Most of which had nothing to do with the stimulus which even hasn't even kicked in yet because of fiber shortages and delays in payout. If events like fiber shortages/USF reform hadn't happened - would they have maintained their growth rate ? I bet the PPS would be much higher than it is today.

      So over the next 2-3 years - can they continually grow organically on top of stimulus (which should start to accelerate now) with cell tower backhaul, int'l and other verticals. We shall see .....

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