Finisar Corp. (FNSR, Financial), the optical communication components and subsystems manufacturer, posted the financial results for the first quarter of fiscal 2018 on Sept. 7.
The company reported a non-GAAP EPS – adjusted to one-time charges –Â of 40 cents, which is in line with analysts’ expectations. Revenue for the quarter came in at $341.8 million, a 0.14% increase from the comparable quarter of fiscal 2017. The company beat expectations on revenue by $176,000 since analysts forecasted that the company would have reported an average figure for quarterly revenue of $341.63 million.
This figure also registers a 4.4% decline in revenue from the previous quarter. This decrease in revenue from the fourth quarter of fiscal 2017, said CEO Jerry Rawls, “resulted primarily from a decline in telecom revenues as well as a decrease in 10G and below datacom transceivers."
From the previous quarter datacom products sales declined 3.1% to $8.4 million due to a lower demand while telecom products sales declined 8.1% to $7.4 million.
The company also reported a steep decline in operating income that fell 27% to $29.9 million in the first quarter of fiscal 2018 from $40.839 million in the fourth quarter of fiscal 2017.
For the second quarter of fiscal 2018, the company's revenue guidance is between $322 million and $342 million. Non-GAAP adjusted EPS are expected to range between 27 cents and 33 cents.
The non-GAAP gross margin and operating margin are forecasted by the company to be in the ranges of 33% to 34% and 10% to 11%.
The company has $1.23 billion in cash and securities as of the first quarter of fiscal 2018 while total debt amounts to $715.7 million. The company has a current ratio of 7.7 and a total debt-equity ratio of 44.4. Both ratios slightly improved from the previous quarter.
GuruFocus gives Finisar a financial strength rating of 6 out of 10 and a profit and growth rating of 6 out of 10.
For the second quarter of 2018, analysts expect EPS will be 50 cents on average while revenue is forecasted to come in at an average of $372.56 million.
Analysts’ average target price per share is $36 for Finisar, which represents a 64% increase from the current share price of $21.99. The tech stock is trading a few cents above its 52-week low of $21.42. The 52-week high is $36.85. The recommendation rating is 1.8 out of 5.
When we combine the forward price-earnings (P/E) ratio of 9.05 with the EPS of $2.04 – as forecasted by analysts for full fiscal 2018 – it yields to a value of $18.46. For next year analysts estimate a growth rate of 19.10% in the company’s earnings and an annual average growth rate of 17.50% for the next five years.
Finisar is trading with a market capitalization of $2.5 billion, and the stock has a P/E ratio of 10.05, a price-sales (P/S) ratio of 1.71 and a price-book (P/B) ratio of 1.55.
Disclosure: I have no positions in Finisar.
