Shares of passive connectivity manufacturer Clearfield Inc (US:CLFD) finished the week with a stellar 26.7% rally as fourth quarter results outpaced all investor and analyst expectations.

The latest rally pushes CLFD’s 2022 total gain to 46.8%, significantly outpacing US market indices.

Clearfield continued its strong growth with net sales rising 110% over the year to $95.0 million from $45.2 million in 2021. The figure was well ahead of consensus forecasts polled around $71 million.

Gross profits grew 90% to $37.5 million with margins retreating -4.1% over the year.

At the bottom line, Clearfield generated net profits of $17 million, rising 129% over the year when compared to $7.4 million in 2021. This equated to $1.22 per share in earnings for investors, coming in ~42% ahead of consensus forecasts of around 86 cents.

The chart provided from the Fintel financial metrics and ratios page for CLFD shows the growth in sales and profitability over the last few years as the company continues to scale up:

The group’s backlog increased 5% over the quarter to $165 million, setting up the company for a strong start to fiscal year 2023. Clearfield expects to reduce the order backlog as they continue to build capacity and reduce the time-lead of product lines.

With the fourth quarter now completed, management decided to introduce FY23 guidance to the market, telling investors they expect to grow net sales by 40-45% over the year to $380 to $393 million. The midpoint of guidance was well ahead of consensus forecasts of $300 million.

CEO and President Chri Beranek commented on the outlook for CLFD stating “We are very bullish on Clearfield’s growth potential in 2023 and beyond”

During the management’s discussion and analysis, CEO Beranek also discussed the progression of the Nestor Cables acquisition, telling investors “We have made significant progress integrating Nestor into our operations and are currently on track to begin production of fiber optic cable at our Mexico facility by early 2023”

Analyst Jaeson Schmidt from Lake Street Capital markets believes the significant earnings beat shows CLFD’s growth story and should dampen any concerns regarding an impending NT slowdown.

Schmidt and the firm were surprised at the strength of the sales guidance and was encouraged to hear that government-funded programs and initiatives only provided a small contribution to the momentum.

Lake Street remains ‘buy’ rated on the stock with an increased target price of $135 from $122.

On average, Clearfield holds a consensus ‘overweight’ rating in the market and an average $127 target price. The consensus is made up of three ‘buy’ ratings and one ‘hold’ rating.

Fintel’s fund sentiment score of 85.43 is bullish on CLFD, based on higher levels of institutional buying activity in the stock relative to other companies. CLFD ranks in the top 3% when screened against 35,564 other companies.

CLFD has a total of 370 institutions on the register that collectively own 9.5 million shares of the float. Some of the largest institutions include: Dimensional Fund Advisors, State Street Corp, Neumeier Poma Investment Counsel, Atika Capital Management LLC, Driehaus Capital Management Llc, and Geode Capital Management, Llc.

 

This article originally appeared on Fintel

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