Acquisition-Fueled Infinera Results Scorch Targets Again

Image source: Infinera.

Shares of Infinera moved sharply higher in late Tuesday trading, after the company reported its fifth consecutive quarter of better-than-expected results. Revenue growth also accelerated materially. Here's a closer look at the most crucial year-over-year figures:

Metric	Q3 2015 Actuals	Q3 2014 Actuals	YOY Growth
Revenue	$232.47 million	$173.56 million	33.9%
GAAP net income	$8.51 million	$4.84 million	75.8%
Earnings per share	$0.06	$0.04	50%
Cash from operations	$32.5 million	$22.3 million	45.7%

Data sources: S&P Capital IQand Infinera press release.

Commenting on the results, CEO Tom Fallon said in a press release:

What went right: Revenue growthaccelerated meaningfully from 22.2% in last year's third quarter. As Fallon points out, acquiring Transmode's metro business was a certain contributor to the gains but that's not necessarily a bad thing. Per-share earnings rose 50% on the basis of generally accepted accounting principles that account fully for acquisition costs.

What went wrong:Not much went wrong when you look at it. Cash from operations grew faster than revenue and gross margin was up slightly year over year (44.2% vs. 43.4% in last year's Q3). Meanwhile, Infinera is positioning itself to serve the entirety of the wavelength division multiplexing market by incorporating Transmode technology into a unified portfolio of products manageable from a single software interface.

What's next:Infinera didn't include guidance in its press release. Nevertheless, analysts tracked by S&P Capital IQ had the company generating $253.62 million in revenue and $0.19 a share in adjusted earnings. That compares with $186.31 million and $0.13 a share in last year's Q4. Longer term, analysts have Infinera growing earnings by an average of 18.75%annuallyduring the next three to five years.

In the meantime, investors should focus on what management says about large-scale deals. Paying up for a unified portfolio only makes sense if there are customers willing to bet equally big on Infinera technology.

The article Acquisition-Fueled Infinera Results Scorch Targets Again originally appeared on Fool.com.

Tim Beyersfinds winter infuriating, especially when it arrives early. He's also a member of theMotley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission but didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim'sweb homeandportfolio holdingsor connect with him onGoogle+,Tumblr, or Twitter, where he goes by@milehighfool.The Motley Fool owns shares of and recommends Infinera. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.