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CommScope (COMM) shares soared 6.8% in the last trading session to close at $18.38. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 5.3% gain over the past four weeks.
COMM’s rally is driven by the company’s relatively healthy first-quarter 2021 results, wherein the bottom line and the top line beat the respective Zacks Consensus Estimate. With solid order trends, the company expects this growth momentum to continue amid post-pandemic market revival, backed by industry tailwinds such as 5G and mobile network densification and expansion of optical fiber networks. Its quarterly net sales improved 1.9% year over year to $2,072 million largely due to higher sales in the Broadband Networks segment.
Despite the Home segment’s lower revenues, the company expects the much-awaited spin-off of the unit to boost future revenues and optimize the business portfolio with right investment amid an evolving marketplace. The restructuring, which is part of CommScope NEXT strategy, will not only ensure CommScope’s competitiveness in the global market but also evoke bullish expectations among investors who are eagerly waiting to reap benefits from the transaction.
Price and Consensus
This wireless and broadband network technology company is expected to post quarterly earnings of $0.45 per share in its upcoming report, which represents a year-over-year change of +40.6%. Revenues are expected to be $2.13 billion, up 1.3% 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 CommScope, 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 COMM 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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CommScope Holding Company, Inc. (COMM) : Free Stock Analysis Report
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