CommScope (NYSE: CTV) designs
and manufactures electronic, coaxial and fiber-optic cable products for data networking, Internet access, wireless communications, telephony and other broadband applications. Among its offerings are high-bandwidth cables that deliver television, telephone and internet access through a single line. CommScope cables are also used in local area networks, residential video wiring and antennae-to-transmitter linking. Further, the firm is a leading provider of coaxial cable for satellite television providers. Comcast (NASDAQ: CMCSA) is a major customer. Corning (NYSE: GLW) is a major competitor.
The company surprised Wall Street last week, when it raised fiscal Q4 revenue guidance to $435-$445 million from prior guidance of $420-$440 million. Analysts had been looking for $434.23 million. Management also said it expected operating income to increase by 30-45 percent, year over year. Robert W. Baird subsequently reiterated its "outperform" rating on the shares. CTV shares popped on the news and then moved into a bullish "pennant" consolidation pattern. Prices frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the issue with five "strong buys," three "buys" and two "holds." Analysts expect a 17 percent average annual growth rate, through the next five years. The CTV P/E ratio (17.79), PEG ratio (1.04), Price to Sales ratio (1.56), Price to Book ratio (3.01), Price to Cash Flow ratio (11.87), Price to Free Cash Flow ratio (14.67), EPS Growth rate (33.47%), Return on Assets (13.67%), Return on Investment (16.04%) and Return on Equity (23.36%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 95 percent of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past 52 weeks, it has traded between $28.28 and $63.51. A stop-loss of $41.25 looks good here. Note that the firm is expected to report fiscal Q4 results in February.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.
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