Why Investors Should Consider Shares of Calix Inc

With a market capitalization of $3.7 billion, you can’t exactly say Calix Inc (NYSE:CALX) is a small 5G stock—but it definitely doesn’t get the attention it deserves.

CALX stock ended 2021 at an all-time high of $80.95, for a yearly gain of 167%. That far outpaced the S&P 500, which marked a yearly gain of 28.5%. Calix stock has significantly outpaced its peers, too. In 2021, Defiance 5G Next Gen Connectivity ETF (NYSE:FIVG) only climbed by 24.5% and the First Trust Indxx NextG ETF (NASDAQ:NXTG) went up by 20%.

Investors were bullish in the early days of 2022, but that euphoria wore off quickly. The stock market tumbled due to surging inflation, rising interest rates, fears of a recession, supply chain issues, and—at the time—concerns that Russia might invade Ukraine.

Things have only gotten worse since January. Inflation remains at 40-year highs, interest rates are still rising, fears of a recession loom, supply chain issues persist, and Russia has invaded Ukraine. Other headwinds include an economic slowdown in China, COVID-19, and monkeypox.

CALX stock has weathered the economic downturn and supply chain issues better than most stocks. As of this writing, Calix stock is:

• Up by 39% over the last month
• Up by 71% over the last three months
• Up by 14% over the last six months
• Down by 23% year-to-date
• Up by 30% year-over-year

Those are big gains, and the outlook for CALX stock is bright.

Calix Inc recently reported record second-quarter results and provided strong guidance. The company's management believes Calix stock is undervalued. That's why the board authorized a one-year $100.0-million share repurchase plan.

Chart courtesy of StockCharts.com

About CALX Stock

Calix provides cloud and software platforms that are designed to "enable service providers of all types and sizes to innovate and transform." (Source: "Investor Relations," Calix Inc, last accessed September 1, 2022.)

The company's customers use real-time data and insights from Calix's platforms to "simplify their businesses and deliver experiences that excite their subscribers."

Calix says its solutions lead to increased subscriber acquisitions, customer loyalty, and revenue for its clients.

Record Q2 Results & Strong Q3 Guidance

For the second quarter ended July 2, Calix Inc announced that its revenue came in above the high end of its guidance, up by 20% year-over-year to $202.0 million. The company's systems revenue increased by 10% and its services revenue increased by 19%. (Source: “Letter to Stockholders,” Calix Inc, July 25, 2021.)

Calix Inc's second-quarter 2022 net income was $7.5 million, or $0.11 per share. That was down from $20.4 million, or $0.30 per share, in the same prior-year period. Its adjusted earnings in the second quarter of 2022 were $14.8 million, compared to $15.0 million in the second quarter of 2021.

Calix Inc ended the second quarter with record cash and investments of $224.9 million. The increase was helped by quarterly cash flow of $25.4 million.

During the second quarter of 2022, Calix Inc:

• Added 34 new broadband service providers
• Increased the number of "Calix Marketing Cloud" customers by 38%
• Had record revenues from its "EXOS" platform, up by 129%
• Had record revenues from its "AXOS" platform, up by 73%

For the third quarter, Calix Inc expects to report revenue in the range of $211.0 to $217.0 million. At the midpoint, that represents a year-over-year increase of two percent and a sequential gain of six percent. The company also expects to report net income per diluted share of $0.18 to $0.24.

Analyst Take

Calix Inc has been running on all cylinders. Despite supply chain issues and other macroeconomic headwinds, the company delivered record second-quarter revenue, with high revenue growth coming from all areas.

The stock market might be uncertain, but Calix’s operational and financial performances have been, in management's words, “exceptional.”

The company is profitable, its balance sheet is solid, and it expects to consistently grow its business and generate cash. Management expects Calix Inc's revenue to grow by about 25% in the third quarter.

Therefore, Calix stock is one to watch.