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Viav Solutions (VIAV) Down 2.3% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Viav Solutions (VIAV). Shares have lost about 2.3% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Viav Solutions due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Viavi Beats Q3 Earnings Estimates on Top-Line Growth

Viavi reported impressive third-quarter fiscal 2022 results primarily driven by an impeccable performance in the NSE business segment and an improving sequential performance in the OSP segment. Both the bottom line and the top line beat the Zacks Consensus Estimate and increased year over year.

Bottom Line

On a GAAP basis, net income in the quarter was $19.2 million or 8 cents per share compared with $17.2 million or 7 cents per share in the year-ago quarter. The year-over-year improvement was primarily attributable to top-line growth.

Non-GAAP net income was $52 million or 22 cents per share compared with $42.3 million or 18 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 1 cent.

Revenues

Quarterly total revenues grew 4% year over year to $315.5 million. The top line surpassed the consensus estimate of $311 million. The results reflect end-market strength in fiber, wireless, lab and production products and disciplined OpEx management in NSE (Network and Service Enablement) and demand for anti-counterfeiting in OSP (Optical Security and Performance Products). Growth in the NSE segment was primarily driven by growth in fiber, assurance solutions and data center products.

Segment-wise, revenues from NE were up 7% from the year-ago quarter to $204.3 million, driven by an increase in fiber, wireless and cable products. SE revenues grew 30.5% to $26.5 million, led by growth in assurance and data center products. OSP revenues decreased 8.1% year over year to $84.7 million.

Cash Flow & Liquidity

During the fiscal third quarter, Viavi generated $28.9 million of cash from operating activities, a reduction of $19.2 million compared to $48.1 in the year-ago period. The reduction was a result of timing of payroll and inventory related payables. As of April 2, 2022, the company had $598.8 million in cash and cash equivalents with $706.4 million of long-term debt.

Q4 Guidance

For the fourth quarter of fiscal 2022 (ending Apr 2, 2022), Viavi expects revenues in the range of $315-$329 million. Non-GAAP earnings are estimated in the band of 22-24 cents per share.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

VGM Scores

Currently, Viav Solutions has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Viav Solutions has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Viav Solutions is part of the Zacks Communication - Components industry. Over the past month, Altice USA, Inc. (ATUS), a stock from the same industry, has gained 7.6%. The company reported its results for the quarter ended March 2022 more than a month ago.

Altice USA, Inc. reported revenues of $2.42 billion in the last reported quarter, representing a year-over-year change of -2.3%. EPS of $0.43 for the same period compares with $0.58 a year ago.

For the current quarter, Altice USA, Inc. is expected to post earnings of $0.32 per share, indicating a change of -38.5% from the year-ago quarter. The Zacks Consensus Estimate has changed +1.2% over the last 30 days.

Altice USA, Inc. has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.


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