JDS Uniphase Corp (JDSU), NeoPhotonics Corp (NPTN): Is the Ciena Corporation (CIEN) Earnings Rebound for Real?

Ciena Corporation (NASDAQ:CIEN) will release its quarterly report on Wednesday, and investors are hoping that the company can make it three quarters in a row of positive adjusted net income. As Ciena Corporation (NASDAQ:CIEN) earnings have recovered, the stock’s valuation has looked a lot more reasonable, even though the company still has a long way to go before it can declare its turnaround complete.

Ciena Corporation (NASDAQ:CIEN)

Ciena Corporation (NASDAQ:CIEN) relies on the health of the market for high-speed networking, with its products helping customers create network infrastructure that optimizes the flow of data and information across their IT platforms. Spending in that area has been muted in recent years, but with signs of a comeback in IT spending, investors are hopeful that the result will be greater sales and profits for Ciena and its peers. Let’s take an early look at what’s been happening with Ciena Corporation (NASDAQ:CIEN) over the past quarter and what we’re likely to see in its report.

Stats on Ciena

Analyst EPS Estimate $0.16
Year-Ago EPS ($0.04)
Revenue Estimate $532.28 million
Change From Year-Ago Revenue 12.3%
Earnings Beats in Past 4 Quarters 2

Source: Yahoo! Finance.

Will Ciena earnings stay positive?
Analysts have gotten much more optimistic in recent months about Ciena earnings, boosting their July quarter projections by a nickel per share and their full fiscal-year estimates by double that amount. The stock has climbed almost 20% just since late May.

Ciena started the quarter off on the right foot, announcing in early June an unexpected adjusted net profit in its April quarter. Even though rivals JDS Uniphase Corp (NASDAQ:JDSU) and NeoPhotonics Corp (NYSE:NPTN) both soared in sympathy, Ciena CEO Gary Smith made the argument that his company should benefit more from a general rise in network-infrastructure building than its peers. Given that neither JDS Uniphase Corp (NASDAQ:JDSU) nor NeoPhotonics Corp (NYSE:NPTN) have reported particularly good results before or since the Ciena report, it’s possible that Ciena Corporation (NASDAQ:CIEN) has found a secret to success that its rivals simply haven’t.

Still, Ciena can’t count out the competition entirely. Finisar Corporation (NASDAQ:FNSR) managed to post equally impressive results and posted further gains after guiding preliminary July quarter revenue and earnings estimates higher. The Ethernet side of Finisar Corporation (NASDAQ:FNSR)’s business has provided particular strength to the company overall, potentially pointing the way toward the direction Ciena should follow as well.

The key to Ciena’s growth, though, will be the speed with which customers build out new networks. In late July, the Southern Cross Cable Network completed the implementation of Ciena 100G technology in its high-speed broadband network serving Australia and New Zealand. As demand rises around the world, Ciena Corporation (NASDAQ:CIEN) needs to get its share of similar wins in order to keep growing.

In the Ciena earnings report, watch to see whether the company can keep posting outpaced growth compared to some of its peers. Another positive result could confirm that Ciena’s strategy is giving it a competitive advantage over rival networking companies.

The article Is the Ciena Earnings Rebound for Real? originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned.

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