Comtech (CMTL) Soars 15.3%: Is Further Upside Left in the Stock?
Comtech Telecommunications (CMTL) shares rallied 15.3% in the last trading session to close at $7.76. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 18.6% loss over the past four weeks.
The uptrend in share prices is largely attributable to the fresh capital infusion in the company. Comtech recently secured a $45 million investment from its existing shareholders – White Hat Capital Partners LP and Magnetar.
The strategic investment has augmented its financial flexibility to capitalize on healthy growth opportunities stemming from large contract awards and growing customer demand for satellite communications technologies and next-generation terrestrial and wireless solutions. In addition, Comtech intends to utilize a part of this investment proceeds to support near-term working capital needs and for general corporate purposes, including debt repayment.
This communications company is expected to post quarterly earnings of $0.28 per share in its upcoming report, which represents a year-over-year change of +221.7%. Revenues are expected to be $152.85 million, up 14.3% 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 Comtech, 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 CMTL 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 >>>>
Comtech is a member of the Zacks Wireless Equipment industry. One other stock in the same industry, Ubiquiti Inc. (UI), finished the last trading session 3% higher at $129.30. UI has returned -10% over the past month.
Ubiquiti's consensus EPS estimate for the upcoming report has remained unchanged over the past month at $1.95. Compared to the company's year-ago EPS, this represents a change of +4.8%. Ubiquiti currently boasts a Zacks Rank of #4 (Sell).
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