It took a while, but the last time Director Charles Hayseen bought Clearfield, Inc. (CLFD), the stock price moved from $12.01 per share to more than $109 in a little less than seven years.
Clearfield designs, manufactures, and distributes fiber optic connectivity and management products, helping service providers reduce the high costs associated with a fiber optic network to deliver the mobile, residential and business services customers want.
Based on the patented Clearview Cassette, the company’s unique single-architected, modular fiber management platform is designed to lower the cost of broadband deployment and maintenance while enabling customers to scale their operations as their subscriber revenues increase.
According to Markets and Markets, “The global fiber optics market size was valued at USD 4.9 billion in 2022 and is projected to reach USD 8.2 billion by 2027, growing at a CAGR of 10.9% from 2022 to 2027. The growth of this market is driven by factors such as growing internet penetrations and data traffic, rising number of data center facilities worldwide, and mounting demand for high bandwidth.” (1)
Hayseen is back. He purchased 3,000 shares of the fiber optics company on February 13, 2023, at $60.50 per share for a total investment of $181,500. Since 2009, the director bought more than $1.4 million of the tech stock while selling more than $3.27 million in CLFD stock. (2) Hayseen’s buys ranged in price from $1.14 to $2.25 per share. Meanwhile, he sold three times between $38.53 to $109.30.
Director Hayseen has shown an ability to be on the right side of the trade, so far at least.
Wall Street believes he could be on the right side of the trade again with a one-year price target of $109.80. (3) Analysts expect the company to earn $4.31 per share (EPS), up from $3.55 per share in 2022. Earnings are forecasted to keep on climbing to $5.14 next year. Top line growth is predicted to be robust too, rising 41.70 percent in 2023 and another 20.40 percent next year. Sales estimates for 2023 are $383.97 million in 2023 and $462.28 million in 2024. (4)
Those are all attractive growth numbers in our opinion.
The typical company in the industry trades at 14.9 times earnings (P/E) and at 3.8 times sales (P/S). If Clearfield hits Wall Street’s EPS and sales projections for 2023 and 2024 and trades at the industry average valuations for earning and sales, we calculate the following potential target stock prices:
Price to Earnings:
2023 – $64.22
2024 – $76.59
Price to Sales:
2023 – $95.87
2024 – $115.42
None of those possible prices appears to be out of range as Clearfield’s 52-week low is $48.91 and its 52-week high is $134.90. CLFD trades at $61.41 as we type.
OVERALL: Clearfield, Inc. (CLFD) could have limited downside and attractive upside according to Wall Street’s sales and earnings forecasts, provided the company trades at the industry’s current P/E and P/S ratios.
Based on Director Charles Hayseen previous buys, prospective investors must have a long-term time horizon and an above-average risk tolerance.
1 – https://www.marketsandmarkets.com/Market-Reports/fiber-optics-market-238443438.html
2 – https://www.secform4.com/insider-trading/1285734.htm
3 – https://finance.yahoo.com/quote/CLFD?p=CLFD&.tsrc=fin-srch
4 – https://finance.yahoo.com/quote/CLFD/analysis?p=CLFD