Calix Inc: 5G Stock Ignores September Slide; Up 80% YTD

Bullish Calix Stock Soared on Strong Results

Shares of Calix Inc (NYSE:CALX) continue to defy the markets and trade in record territory. During a month in which the S&P 500 has lost more than 1.2% of its value, CALX stock has advanced a whopping 13.7%.

There’s more to Calix stock than just a great September, which is historically the worst month for Wall Street.

CALX stock is also up by 198% year-over-year, versus the S&P 500, which is only up by 53.4% in the same period. And since the start of this year, Calix stock has increased by 80%. In the same time frame, the S&P 500 has only gone up by 18.5%.

Calix Inc hasn’t just been trouncing the broader stock market; it has also been leaving its peers in the dust. The Defiance 5G Next Gen Connectivity ETF (NYSE:FIVG) is up by 38.5% year-over-year, while the First Trust Indxx NextG ETF (NASDAQ:NXTG) has rallied by 38%.

I’ve been keeping an eye on Calix Inc for a while now. When I wrote about Calix stock back in November 2020, it was trading at $23.94 per share. When I profiled it in April 2021, it was trading at $44.42. Currently trading at $53.45, CALX stock is up from those periods by 123% and 20%, respectively.

There’s reason to be bullish on Calix Inc.

In the second quarter, the telecommunications equipment manufacturer announced excellent financial results, once again breaking a number of records and outpacing the company’s own aggressive guidance.

This included:

• Record total revenue
• Record earnings per share and adjusted earnings per share
• The fourth consecutive quarter of positive free cash flow
• The highest reported cash balance in the company’s history

Calix Inc’s outlook is robust, with its third-quarter revenue projected to advance between nine percent and 13%, and its net income per share expected to be between $0.26 and $0.30.

Chart courtesy of StockCharts.com

CALX Stock Overview

Calix provides cloud and software platforms that help communication services providers (CSPs) deliver a range of services, from basic voice and data to advanced broadband services. (Source: “Calix, Inc. (CALX),” Yahoo! Finance, last accessed September 23, 2021.)

Calix Inc has been making an effort to diversify its customer base, adding 100 new customers per year.

After its most recently completed quarter, the company announced that, for the third consecutive quarter, no customer accounted for greater than 10% of its revenue.

Calix Inc’s products include “Calix Cloud,” “Calix Marketing Cloud,” “Calix Support Cloud,” “Calix Operations Cloud,” “EXOS,” and “AXOS.”

Another Strong Quarter

For the second quarter ended July 3, Calix announced that its revenue increased by 42% year-over-year to $168.7 million, above the high end of the company’s previous guidance range of $157.0 to $163.0 million. (Source: “Letter to Stockholders,” Calix Inc, July 26, 2021.)

During the quarter, the company set records for gross margin and adjusted gross margin. Its gross margin increased by 570 basis points year-over-year to 53.1%, while its adjusted gross margin went up by 260 basis points to 52.8%.

For the second quarter of 2021, Calix Inc reported record net income of $20.4 million, or $0.30 per share, versus a second-quarter 2020 net loss of $4.2 million, or $0.07 per share. Its adjusted net income in the second quarter of 2021 increased year-over-year from $8.5 to $25.8 million.

The company ended the second quarter of 2021 with cash, cash equivalents, and marketable securities of $175.8 million, a sequential increase of $25.8 million.

Moreover, Calix Inc generated positive operating cash flow for the eighth consecutive quarter and positive free cash flow for the fourth consecutive quarter.

Business Outlook

Management said it expects this trend to continue for the foreseeable future. For the third quarter of 2021, Calix Inc expects to report:

• Revenue in the range of $164.0 to $170.0 million, which, at the midpoint, represents an 11% increase over the $105.5 million in Q3 2020
• Net income per share between $0.16 and $0.20, compared to $0.32 per share in Q3 2020
• Positive cash flow

While Calix’s management expects to report another quarter of high demand, it said the company’s results will continue to be impacted by supply chain constraints and logistical challenges.

Analyst Take

Calix Inc is one of the most reliable 5G stocks out there.

As mentioned earlier, Calix reported great second-quarter financial results, provided strong guidance, and entered the third quarter in the best financial position in its history—with a rock-solid balance sheet.

While CALX stock has already rallied by 198% year-over-year and 752% over the last two years, the company’s outlook is excellent. As such, Calix stock could keep rising.