Why Alliance Fiber Optic Shares Lit Up

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Alliance Fiber Optic Products have surged nearly 13% today after the company bested the Street's earnings consensus and offered strong guidance for the upcoming quarter.

So what: Alliance's revenue rose 65% year over year to $19 million, narrowly missing the $19.1 million consensus but nevertheless posting marked improvement. Earnings per share came in at $0.49, $0.02 better than the lone estimate. For the in-progress third quarter, Alliance anticipates revenue in the $19.5 million to $20.5 million range, which is better than the flat $19.1 million revenue consensus.


Now what: Analysts weren't expecting much out of Alliance on a sequential basis, so any improvement was bound to get some attention. This also seems to be a strong refutation of the recent B. Riley downgrade to "hold" status, as analyst Dave Kang mentioned last week that he found it difficult to believe that a $19-million-plus revenue level could be sustainable. Alliance's current 27 P/E isn't particularly cheap, but with this kind of growth on the way (even the low-end projection would be a big boost over last year's Q3 revenue of $12.4 million), it's not exactly nose-bleed expensive, either.

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The article Why Alliance Fiber Optic Shares Lit Up originally appeared on Fool.com.

Fool contributor Alex Planes 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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