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Cambium (CMBM) Issues Preliminary Q1 Results, Revenues Down

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Cambium Networks Corporation CMBM recently issued preliminary first-quarter 2022 results. The selective preliminary metrics offer clarity regarding its business operations as it aims to navigate through fresh lockdown restrictions in China and supply chain headwinds.

Management currently expects first-quarter GAAP revenues of $61-$63 million compared with earlier expectations of $77.5-$81.5 million. The lower revenue tally is primarily due to manufacturing and supply chain disruptions owing to lockdown restrictions in China. An unexpected rise in COVID-19 cases in the Shenzhen province of the country led to lower manufacturing in mid-March. Additionally, a lockdown in Shanghai in late March led to a closure of the distribution and warehousing facility of the company, adversely impacting its top line. The Zacks Consensus Estimate for revenues is currently pegged at $80 million.

Cambium currently expects net income to be below the lower end of the earlier guidance range both on a GAAP and non-GAAP basis. The company had earlier expected non-GAAP earnings in the range of $2.9-$4.4 million or 10-15 cents per share, with GAAP earnings being anticipated in the band of $0.3-$1.9 million or 1-7 cents per share.

The company expects to witness some recovery in revenues in the second quarter on broad-based expectations of no fresh lockdown restrictions. Cambium is well-positioned to benefit from proprietary software and product ramp-up, likely facilitating it to deliver a compelling combination of price, performance and spectrum efficiency. One of the major advantages of the company is its fixed wireless broadband networking infrastructure solutions, which are distinguished by embedded intelligence and scalability. The majority of its revenues are derived from Point-to-Multi-Point (PMP) and Point-to-Point (PTP) solutions. PTP solutions are connected to high-bandwidth wireline networks in a bid to transport wireless broadband backhaul to facilities. PMP solutions are mainly used to backhaul video surveillance systems.

The company believes that growth in data traffic is likely to be primarily driven by the addition of applications and connected devices used for both enterprise and service provider use cases. Moreover, with the rapid transition to Wi-Fi 6 solutions, Cambium witnessed improvements in enterprise Wi-Fi solutions supported by enhanced field deployments. Accretive investments in high-speed wireless networks for 5G deployments are likely to position its portfolio to secure lucrative opportunities in the long run.

Some of its competitive strengths are advanced RF signal algorithms that boost network performance with evolving technologies like noise filtering and frequency reuse and efficient wireless fabric that enables operators to strengthen their networks with incremental fixed wireless access points. Its cloud-based network management software acts as a major tailwind that simplifies the overall deployment process through hassle-free configuration and monitoring. Continued investments in wireless fabric and embedded software capabilities with expanded channel partner relationships are the cornerstones of its long-term growth across diverse markets.

Shares of the company have lost 65.8% in the past year compared with the industry’s decline of 13.6%. Nevertheless, we remain impressed with the inherent growth potential of this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Sierra Wireless, Inc. SWIR, carrying a Zacks Rank #2 (Buy), is a solid pick within the broader industry classification. It has a long-term earnings growth expectation of 12.5% and delivered an earnings surprise of 58%, on average, in the trailing four quarters.

Over the past year, Sierra Wireless has gained 14.6%. Earnings estimates for the current year for the stock have moved up 68.8% since April 2021. The company continues to launch innovative products for business-critical operations that require high security and optimum 5G performance.

Arista Networks, Inc. ANET, sporting a Zacks Rank #1, is another solid pick for investors. It has a long-term earnings growth expectation of 15.4% and delivered a modest earnings surprise of 7.7%, on average, in the trailing four quarters. Earnings estimates for the current year have moved up 30.4% since April 2021, while that for the next year is up 41.1%.

Arista benefits from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Over the past year, Arista has gained 69.6%.

KVH Industries, Inc. KVHI, a Zacks Rank #2 stock, delivered an earnings surprise of 20%, on average, in the trailing four quarters.

Despite global supply chain disruptions, KVH Industries is driving growth and margin expansion through new product introduction and subscriber migration to High-Throughput Satellites. The company aims to make decisive inroads into the still-nascent autonomous transportation markets with a strong balance sheet and zero debt. If KVH Industries manages to effectively mitigate supply chain woes, there could be room for cash flow expansion.

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