Why Ciena Corporation Stock Popped 18.3% in 2016

By Steve Symington Markets Fool.com

Ciena's high-capacity Waveserver platform. Image source: Ciena Corporation.

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What happened

Shares ofCiena Corporation(NYSE: CIEN)climbed 18.3%in 2016,according to data provided byS&P Global Market Intelligence, thanks to a pair of strong quarterly earnings reports, as the telecommunications networking equipment company continued to outgrow its peers.

So what

That's not to say Ciena's rise was smooth. In fact, shares first plunged in early March after the company posted mixed fiscal first-quarter results and a forward outlook that fell short of analysts' consensus estimates. At the time, Ciena CEO Gary Smith noted that while the company was engaging "with a more diverse set of customers," recent macroeconomic volatility made its near-term picture less clear.But Ciena largely put those concerns to rest in early June, when shares climbed more than 11% after its second-quarter revenue came in near the high end of that conservative guidance.

Fast forward to December, and shares climbed another 14% after Ciena reported a similar 3.5% increase in fiscal fourth-quarter revenue to $716.2 million, and a roughly $2 million increase in adjusted net income to $69.4 million, or $0.44 per share. By comparison, Wall Street was looking for slightly higher adjusted earnings of $0.46 per share, and on roughly the same revenue. But Ciena management left investors optimistic by pointing out this was the company's seventh straight year of outgrowing its overall market, all while it continued to improve operating results.

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Now what

Perhaps more compelling were Smith's comments last month that Ciena Corporation expects to continue to take market share and drive operating leverage in fiscal 2017. So while Ciena's growth is certainly modest, investors can't help but be excited for its continually improving profitability, and the company's positioning for when the telecommunications networking equipment market enjoys an inevitable resurgence.

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Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.