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Clearfield (CLFD) Moves 22.6% Higher: Will This Strength Last?

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Clearfield (CLFD) shares soared 22.6% in the last trading session to close at $36.73. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 0.2% gain over the past four weeks.

CLFD’s rally is driven by the company’s impressive second-quarter fiscal 2021 results, wherein the company’s top and bottom lines surpassed the respective Zacks Consensus Estimate of $26 million and 16 cents. It delivered surprises of 14.2% and 68.8%, respectively. Markedly, the company witnessed 45% increase in net sales, driven by significant growth in Community Broadband and Multiple System Operators revenues. Also, favorable product mix and operational effectiveness initiatives further boosted Clearfield’s margins. Encouraged by accretive deployment plans and 5G efforts on the back of an optimistic outlook, robust demand for broadband services amid the global pandemic is expected to drive the company’s expanding pipeline and strategic investments in the long run.

Price and Consensus

Price Consensus Chart for CLFD
Price Consensus Chart for CLFD

This maker of fiber optic management products is expected to post quarterly earnings of $0.14 per share in its upcoming report, which represents a year-over-year change of -36.4%. Revenues are expected to be $26 million, up 0.1% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Clearfield, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on CLFD going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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