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Is Infinera (INFN) Poised for Strong Earnings in Q4? - Analyst Blog

Digital optical networking systems provider, Infinera Corporation ( INFN ) is slated to release its fourth-quarter 2014 financial numbers on Jan 22, 2015, after market close.

In the last reported quarter, the company had delivered a robust 200% positive earnings surprise. Notably, the company has outpaced the Zacks Consensus Estimate in each of the trailing four quarters, with an average earnings beat of 174.11%. Let's see how things are shaping up for this announcement.

Why a Likely Positive Surprise?

Our proven model shows that Infinera is likely to beat earnings because it has the perfect combination of two key ingredients.

Zacks ESP : Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +20.00%. This is because the Most Accurate estimate stands at 6 cents, whereas the Zacks Consensus Estimate is pegged at 5 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.

Zacks Rank : Infinera currently has a Zacks Rank #2 (Buy). Note that stocks with Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

The combination of Infinera's Zacks Rank #2 and +20.00% ESP makes us reasonably confident of a positive earnings beat.

What is Driving the Better-than-Expected Earnings?

Late last year, Infinera started shipping Cloud Xpress - its solution for the metro cloud market. The newly launched Cloud Xpress system is expected to cut power usage by 50% compared to other metro cloud solutions. We expect strong demand for Cloud Xpress to bolster Infinera's top-line significantly.

Moreover, the addition of DTN-X and DTN customers, the company's metro cloud market transition and strong 100G optical exposure combined with sustained focus on global expansion of its DTN-X platform are factors likely to impact the quarter favorably.

However, the company needs to focus on continuous launch of new products and innovative services to counter stiff competition from its peers and sustain its position in the highly competitive digital optical networking market.

Stocks to Consider

Infinera is not the only company looking up this earnings season. Here are some other companies to consider as our model shows they also have the right combination of elements to post an earnings beat this quarter:

Ellie Mae, Inc. ( ELLI ), with earnings ESP of +40.00% and a Zacks Rank #1 (Strong Buy).

Procera Networks, Inc. ( PKT ), with earnings ESP of +25.00% and a Zacks Rank #2.

Syntel, Inc. ( SYNT ), with earnings ESP of +12.68% and a Zacks Rank #2.

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INFINERA CORP (INFN): Free Stock Analysis Report

ELLIE MAE INC (ELLI): Free Stock Analysis Report

SYNTEL INC (SYNT): Free Stock Analysis Report

PROCERA NETWRKS (PKT): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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