Clearfield Stock: 5G Stock Up 42% in 2022 & Could Keep Rising

CLFD Stock Rips Higher After Another Record Quarter

Clearfield Inc (NASDAQ:CLFD) seems to have figured out what it takes to make a stock climb higher in the face of macroeconomic headwinds. The company has reported record financial results quarter after quarter, year after year.

For its fiscal year 2022, which ended September 30, Clearfield reported record first-, second-, third-, and fourth-quarter results. This wasn’t some sort of fluke; Clearfield Inc also reported record financial results for every quarter of fiscal 2021.

It doesn’t appear as though Clearfield stock investors are getting tired of winning. As of this writing, CLFD stock is up by:

  • 12.5% over the last month
  • 115% over the last six months
  • 41% year-to-date
  • 78% year-over-year

The outlook for Clearfield stock is solid, too. For fiscal 2023, Clearfield Inc expects its revenue to jump by 40% to 45% year-over-year. Moreover, the company recently announced that its order backlog increased by 148%.

Advertisement

Clearfield Inc Overview

5G wireless networks need a lot of fiber, much more than their predecessors did. With 4G, a single cell can serve 10 square miles. With 5G, one cell can only serve a diameter of 750 feet, and each cell might require approximately eight miles of fiber. (Source: “Investor Presentation: August 2022,” Clearfield Inc, last accessed December 2, 2022.)

That’s where Clearfield fits in, with its “fiber to anywhere” platform. The company designs, manufactures, and distributes fiber-optic management, protection, and delivery products for communication networks, including the utility/municipality, data center, enterprise, and military markets.

There’s no reason to believe the demand for the company’s products and services will slow down. Over the next five years, more new fiber will be needed than has ever been used to date. The 5G market is expected to be a sustainable opportunity for more than 20 years.

Management Reports Another Record Quarter & Provides Strong Guidance

For the fourth quarter of fiscal 2022, Clearfield announced that its revenue increased by 11% year-over-year to a record $95.0 million. (Source: “Clearfield Reports Record Fiscal Fourth Quarter and Full Year 2022 Results,” Clearfield Inc, November 17, 2022.)

This figure includes $7.0 million from the company’s acquisition of Nestor Cables (a leading European developer and manufacturer of fiber optic cable solutions) in July.

Clearfield Inc’s organic revenue in its fourth fiscal quarter went up by 94% year-over-year to $88.0 million.

The company’s gross profit in the fourth quarter of fiscal 2022 increased by 90% to $38.0 million (39.5% of Clearfield Inc’s net sales) from $20.0 million (or 43.6% of its net sales) in the fourth quarter of fiscal 2021. The gross profit would have been even higher, but they were negatively affected by shipping costs, supply chain shortages, and lower gross profit from Nestor Cables’ sales.

Clearfield Inc’s fourth-quarter net income more than doubled to $17.0 million, or $1.22 per share, up from $7.0 million, or $0.53 per share, in the same prior-year period.

As of September 30, the company’s order backlog was $165.0 million, an increase of five percent from $157.0 million as of June 30 and an increase of 148% from $66.0 million as of September 30, 2021.

In fiscal 2022, Clearfield Inc’s revenue grew by 92% year-over-year to a record $271.0 million. The company’s full-year gross profit went up by 84.6% year-over-year to $113.0 million, or 41.7% of its net sales. Its net income in the fiscal year rallied by 143% year-over-year to $49.0 million, or $3.55 per share.

Cheri Beranek, Clearfield Inc’s president and CEO, noted, “As reflected in its record financial performance in the fiscal fourth quarter, Clearfield continues to convincingly execute on its strategic growth plan to capitalize on the market demand for fiber-fed broadband.” (Source: Ibid.)

Thanks to Clearfield Inc’s large order backlog, management estimates that the company will report revenues of $380.0 to $393.0 million for fiscal 2023, representing 40% to 45% year-over-year growth.

Analyst Take

It turns out there’s no magic to making a stock rise in this tough economic climate. It’s all about business performance, and few seem to be replicating what Clearfield Inc has been doing. The company continues to report record quarterly and annual financial results and provide strong guidance.

Clearfield’s order backlog stands at an unprecedented level, with roughly two-thirds of the orders scheduled for the next two quarters. That should result in significant year-over-year financial growth in the first half of fiscal 2023.