Here's Why ADTRAN (ADTN) is a Solid Investment Bet Now
Shares of ADTRAN, Inc. ADTN have surged 41.5% over the past year driven by accretive customer base and healthy revenues on the back of software innovations. Earnings estimates for the current fiscal year have increased 23.5% over the past year, and the same for the next fiscal has moved up 173.3%, implying its robust inherent growth potential. With healthy fundamentals, this Zacks Rank #2 (Buy) communications equipment manufacturer appears to be a solid investment option at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Growth Drivers
ADTRAN is focused on being a top global supplier of Access infrastructure and related value-added solutions from the Cloud Edge to the Subscriber Edge through a broad portfolio of flexible hardware and software network solutions. These products enable customers to transition to the fully converged, scalable, highly automated, cloud-controlled voice, data, Internet and video network of the future. The company has enabled service providers to leverage the ADTRAN Mosaic Software-Defined Access architecture that combines modern Web-scale technologies with open-source platforms to facilitate rapid innovation in multi-technology, multi-vendor environments. The Mosaic cloud platform and Mosaic OS, combined with programmable network elements, provide operators with a highly agile, open-services architecture. This allows operators to better compete with Web-scale competition by reducing the time and cost to launch new service, technologies and best-of-breed suppliers as they strive to reduce operational costs while creating and deploying differentiated product offerings.
Despite challenging macroeconomic conditions triggered by the COVID-19 pandemic, ADTRAN expects solid traction in domestic markets for ultra broadband and Fiber-To-The-Home solutions along with SD access and EPON solutions. Its products and services provide solutions supporting fiber- and copper-based infrastructures and a growing number of wireless and coax-based solutions, lowering the overall cost to deploy advanced services across a wide range of applications. The company also anticipates a pickup in capital spending in Tier-1, Tier-2 and regional service provider market segments with increasing 5G deployments. ADTRAN’s global leadership in software-defined access is likely to ensure a steady stream of revenues as it helps clients reduce costs and accelerate service delivery and deployment.
The company expects to gain from increased customer engagements across a comprehensive portfolio of software-defined access, 10G solutions and G.fast products, thereby enabling carriers to upgrade slower legacy networks to state-of-the-art technologies. In order to complement the Network Solutions portfolio and enable customers to accelerate time to market, reduce costs and improve satisfaction, ADTRAN offers a complete portfolio of maintenance, turnkey network implementation, maintenance, solutions integration and managed services. The company’s network implementation services offer a full spectrum of services related to engineering (pre-construction), installation/turn-up (construction) and provisioning (post-construction), partnering with customers to tailor a program to meet each service delivery need. The ProCloud Wi-Fi service, which has been developed on the company’s virtual Wireless LAN, is opening up new opportunities as Valley Business Solutions is utilizing its technology on a much wider scale. Apart from these products, the company has registered significant growth in its professional service activities that deploy the Total Access System components in telecommunication companies.
Additionally, ADTRAN has launched Mosaic Open Networking Alliance to foster the widespread development and industry adoption of Software Defined Networking and Network Function Virtualization solutions based on open standards. The Alliance includes two levels of engagement, the first of which comprises Collaboration Members committed to joint innovation, collaboration, insight and knowledge sharing. The second tier includes Integration Members, a community of partners who will integrate with or work within the Mosaic framework. This involves Technology Partners focused on delivering innovative programmable network functions and service partners delivering managed services, system integration and other network operation requirements.
The stock delivered a positive earnings surprise of 132.3%, on average, in the trailing four quarters, beating estimates on each occasion. With a modest dividend yield of 2.9%, this stock appears to be an enticing investment option for the volatile market.
Other Key Picks
Some other top-ranked stocks in the industry are Calix, Inc. CALX, Clearfield, Inc. CLFD, and Sonim Technologies, Inc. SONM, each carrying a Zacks Rank #2.
Calix delivered a positive earnings surprise of 72.2%, on average, in the trailing four quarters.
Clearfield delivered a positive earnings surprise of 44.3%, on average, in the trailing four quarters.
Sonim delivered a positive earnings surprise of 2.2%, on average, in the trailing four quarters.
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