ADTRAN (ADTN) will continue to benefit from the government’s broadband stimulus spending.
The company is expected to grow its earnings per share 18.3% in 2010, 16.4% in 2011, and 10.0% over the next three to five years. The stock also offers investors a dividend yield of 1.3%.
This Zacks #2 Rank stock trades at 20.3x 2010 consensus EPS estimates and 17.4x 2011 consensus EPS estimates.
Business
ADTRAN, Inc. is a leading global provider of networking and communications equipment, with a portfolio of more than 1,700 solutions for use in the last mile of today’s telecommunications networks.
Earlier this month, ADTRAN announced that it was selected to provide its TA5000 and TA1100/1200 products to expand broadband service to unserved and underserved areas in Mississippi. The funding for these contracts came from the US government’s broadband stimulus package.
First-Quarter Results
The company’s sales increased 15% to $127 million for the quarter, compared to $110.4 million for the first quarter of 2009. ADTRAN earned $0.29 per share, topping the Zacks Consensus by 2 cents. In the last five quarters, ADTRAN has beaten the Zacks Consensus Estimate by an average of 6.5%.
ADTRAN CEO Tom Stanton said, “We are pleased with our first quarter results which were driven by accelerating deployments of our wide portfolio of converged access solutions. Our Broadband Access category led the increase in revenue growing a notable 64% over the prior year and setting a new record level. Internetworking revenues also showed an impressive performance posting 45% year over year growth. The broad based increase in revenue points to the success of our positioning in an environment where carriers and enterprises are selectively accelerating investment to realize benefit from this new era of converged services.”
Estimates
In the last two months, ADTRAN’s earnings estimates have held steady. The 2010 Zacks Consensus Estimate is $1.38, while the Zacks Consensus Estimate for 2011 is $1.61.
The Chart
ADTN shares bounced off a solid double-bottom formation in Feb 2010 and proceeded to climb from $21 to nearly $30 in two months. The stock has sold-off with the rest of the market since the end of April. However, the stock has rebounded and now trades at just $2 below its 52-week high.
