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Clearfield (CLFD) Surges 11.3%: Is This an Indication of Further Gains?

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Clearfield (CLFD) shares ended the last trading session 11.3% higher at $42.53. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 1.4% loss over the past four weeks.

CLFD’s rally is driven by optimism over its accretive deployment wins with multiple telco companies followed by the continued launch of innovative products and services. Higher Community Broadband and Multiple System Operators revenues are a major tailwind, given the rising demand for crucial connectivity services amid the COVID-19 pandemic. Also, favorable product mix and operational effectiveness initiatives drive Clearfield’s margins. Such distinct strategies, focused 5G efforts and strategic investments support its expanding pipeline, which bodes well for the company in the long haul.

This maker of fiber optic management products is expected to post quarterly earnings of $0.29 per share in its upcoming report, which represents a year-over-year change of +31.8%. Revenues are expected to be $32 million, up 23.2% 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 2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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