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Ciena (CIEN) Gains But Lags Market: What You Should Know

Zacks Equity Research

In the latest trading session, Ciena (CIEN) closed at $40.37, marking a +0.9% move from the previous day. This change lagged the S&P 500's 1.1% gain on the day. Elsewhere, the Dow gained 1.05%, while the tech-heavy Nasdaq added 1.32%.

Heading into today, shares of the developer of high-speed networking technology had lost 12.3% over the past month, lagging the Computer and Technology sector's loss of 5.47% and the S&P 500's loss of 5.05% in that time.

CIEN will be looking to display strength as it nears its next earnings release, which is expected to be September 5, 2019. In that report, analysts expect CIEN to post earnings of $0.57 per share. This would mark year-over-year growth of 18.75%. Our most recent consensus estimate is calling for quarterly revenue of $930.51 million, up 13.64% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2 per share and revenue of $3.53 billion, which would represent changes of +43.88% and +14.02%, respectively, from the prior year.

Any recent changes to analyst estimates for CIEN should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. CIEN is holding a Zacks Rank of #3 (Hold) right now.

Looking at its valuation, CIEN is holding a Forward P/E ratio of 19.97. Its industry sports an average Forward P/E of 19.66, so we one might conclude that CIEN is trading at a premium comparatively.

Also, we should mention that CIEN has a PEG ratio of 1.15. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Fiber Optics was holding an average PEG ratio of 1.38 at yesterday's closing price.

The Fiber Optics industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 108, which puts it in the top 43% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.

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