Infinera Stock: This Optical Networking Stock Could Triple Again

Evolution of 5G Could Power INFN Stock’s Growth

The rapid adoption of lightning-fast 5G technology will power innovation and lead to the development of new products and services—and it’s not stopping there.

There’s already a push to develop 6G technologies. A 6G network could be as fast as one terabit per second, or 100 times faster than the fastest 5G network. Consequentially, wireless speeds are accelerating and only getting faster.

Investors wanting to capitalize on optical networking and 5G technology should consider shares of companies that help build the network infrastructure. One such company is advanced optical networking solutions developer Infinera Corp. (NASDAQ:INFN).

Infinera serves over 500 customers in more than 100 countries. This includes most of the world’s largest telecommunications service and Internet content providers. (Source: “Investor Relations,” Infinera Corp., last accessed July 5, 2022.)

The company has been delivering strong revenue growth and is expected to turn profitable in 2023. Yet Infinera stock has been taking a beating, down by nearly 50% from its 52-week high of $10.67 and down by a whopping 78% from its high of $25.24, which was set in 2015.

I view Infinera Corp.’s current share-price weakness as a good risk/reward entry point for contrarian investors who are willing to wait it out.

Chart courtesy of

Compelling Valuation for Infinera Corp.

Infinera Corp.’s five-year revenue picture points to four consecutive years of growth following a decline in 2017. Infinera reported its first-ever billion-dollar revenue year in 2019, which was followed by record revenues of more than $1.4 billion in 2021.

Look for Infinera to grow its revenues by 7.1% to $1.5 billion this year and by 11% to $1.7 billion in 2023. These numbers imply that Infinera Corp. trades at a cheap 0.7 times its consensus 2023 revenue estimate. (Source: “Infinera Corporation (INFN),” Yahoo! Finance, last accessed July 5, 2022.)

Fiscal YearRevenuesGrowth
2017$740.7 MillionN/A
2018$943.4 Million27.4%
2019$1.3 Billion37.7%
2020$1.36 Billion4.4%
2021$1.43 Billion5.1%

(Source: “Infinera Corp.” MarketWatch, last accessed July 5, 2022.)

Infinera Corp. has delivered two straight years of earnings before interest, taxes, depreciation, and amortization (EBITDA) income after years of EBITDA losses.

Fiscal YearEBITDA (Millions)Growth

(Source: Ibid.)

As a company grows its revenue base, it’s important to look at cost management, which is the case here. On the bottom line, Infinera Corp. has been losing money building its business.

The company’s generally accepted accounting principles (GAAP) earnings per share (EPS) were negative in its last five reported years. However, there’s a pathway toward adjusted profits in 2023.

Based on the current consensus estimates, Infinera Corp. will report an adjusted loss of $0.02 per diluted share this year. Furthermore, the company is anticipated to follow this up with profits of $0.36 per diluted share in 2023. (Source: Yahoo! Finance, op. cit.)

If the company can deliver on this, it should be trading at an attractive 15.2 times its consensus 2023 EPS estimate.

Fiscal YearGAAP Diluted EPSGrowth

(Source: MarketWatch, Inc., op. cit.)

Infinera Corp.’s free cash flow (FCF) has been negative in its last five reported years, but the revenue growth and move toward profitability should drive its FCF toward positive.

Fiscal YearFCF (Millions)Growth

(Source: Ibid.)

Analyst Take

Infinera Corp. has broad institutional ownership, with 286 institutions holding a 96.7% stake in INFN stock. (Source: Yahoo! Finance, op. cit.)

It’s rare for a company to generate well over $1.0 billion in annual revenues and trade at an attractive forward revenue and EPS multiple. And yet, Infinera stock is down as much as it is.

Given Infinera Corp.’s strong fundamentals, I view this as an excellent opportunity for investors to take a closer look at INFN stock.