Brocade Communications Systems Stock Up 12% on Earnings News

By Fool.com

What:Network storage technology companyBrocade Communications Systems,(NASDAQ: BRCD) stock was up more than 15% early in trading today following yesterday's third quarter earnings release. As of this writing (12:10PM ET) shares are still up nearly 12%.

So what:The company's $0.27 per share earnings and $552 million in revenue came in ahead of Wall Street analyst estimates of $0.22 EPS and $550.4 million in sales. This was a bit of a surprise, especially considering the relative weakness in some global economies, including Europe, and the foreign exchange headwinds for sales outside the U.S.

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The company's guidance for the fourth quarter, with relatively strong growth expectations in key product segments, is also playing a role in today's big jump.

Now what:Brocade continues to grow sales and execute relatively well, with its recent announcement of an expanded OEM partnership with computer makerLenovoone example. Furthermore, the company's stock is still down almost 9% so far this year, and from a valuation perspective, looks to be getting pretty cheap:

BRCD data by YCharts

The current price-to-earnings multiple of 14 is well below Brocade's recent historical average, so this could be a good time to buy shares. But with that said, the caveat, of course, is that this is a high-tech company selling products that are indirectly tied to consumer and corporate demand. There are signs that the global economy may be getting a bit shaky, and that, of course, could weigh heavily on demand for Brocade's products in the near term.

The article Brocade Communications Systems Stock Up 12% on Earnings News originally appeared on Fool.com.

Jason Hall has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.

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