U.S. markets close in 4 hours 39 minutes

Exfo (EXFO) Stock Sinks As Market Gains: What You Should Know

Zacks Equity Research

In the latest trading session, Exfo (EXFO) closed at $4.03, marking a -0.74% move from the previous day. This move lagged the S&P 500's daily gain of 2.14%. At the same time, the Dow added 2.06%, and the tech-heavy Nasdaq gained 2.65%.

Heading into today, shares of the telecommunications testing company had lost 5.35% over the past month, outpacing the Computer and Technology sector's loss of 10.97% and the S&P 500's loss of 6.63% in that time.

EXFO will be looking to display strength as it nears its next earnings release. On that day, EXFO is projected to report earnings of $0.05 per share, which would represent year-over-year growth of 600%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $74.40 million, up 3.02% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $0.21 per share and revenue of $293.80 million. These totals would mark changes of +133.33% and +9%, respectively, from last year.

Any recent changes to analyst estimates for EXFO should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. EXFO is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that EXFO has a Forward P/E ratio of 20.73 right now. Its industry sports an average Forward P/E of 25.3, so we one might conclude that EXFO is trading at a discount comparatively.

The Communication - Components industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 177, putting it in the bottom 31% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
EXFO Inc (EXFO) : Free Stock Analysis Report
To read this article on Zacks.com click here.