Comtech Telecommunications (CMTL) shares rallied 11% in the last trading session to close at $5.75. 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 48% gain over the past four weeks.
The uptrend was largely buoyed by government SATCOM modernization, digital ground infrastructure upgradation and increased NG911/cloud adoption. Strong consolidated book-to-bill and funded backlog support multi-period revenue visibility. Comtech has exited low-margin legacy work and is pivoting S&S to digital common ground modems, network solutions and deployable MPRs. The company is also benefiting from healthy gross margin gains over the past year, reflecting the shift from NRE to higher-volume production.
This communications company is expected to post quarterly loss of $0.27 per share in its upcoming report, which represents a year-over-year change of -50%. Revenues are expected to be $110.21 million, down 13.1% from the year-ago quarter.
While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and 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 part of the Zacks Wireless Equipment industry. Ericsson (ERIC), another stock in the same industry, closed the last trading session 2.3% lower at $12.74. ERIC has returned 14% in the past month.
For Ericsson, the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.13. This represents a change of -7.1% from what the company reported a year ago. Ericsson currently has a Zacks Rank of #3 (Hold).
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
