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Strength Seen in Comtech (CMTL): Can Its 5.8% Jump Turn into More Strength?

Comtech Telecommunications (CMTL) shares rallied 5.8% in the last trading session to close at $12.15. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 7.6% gain over the past four weeks.

Comtech is likely to benefit from a healthy demand trajectory in the Satellite Earth Station business, accentuated by the new Heights product, potential new deals, the UHB acquisition and rising demand for bandwidth. Continuous infrastructure upgrade by carriers further offers an upside potential for the company.

Comtech recently added Aarna Networks as its fourth publicly announced EVOKE technology partner to create new integrated cloud-native solutions for emerging commercial and government use cases. The companies aim to enable customers easily add and manage a variety of open architecture cloud-based applications across diverse networks in both terrestrial and non-terrestrial environments.

This communications company is expected to post quarterly earnings of $0.11 per share in its upcoming report, which represents a year-over-year change of +83.3%. Revenues are expected to be $135.85 million, up 11.2% from the year-ago quarter.

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While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Comtech, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on CMTL going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Comtech is a member of the Zacks Wireless Equipment industry. One other stock in the same industry, Ericsson (ERIC), finished the last trading session 0.6% higher at $5.19. ERIC has returned -3.6% over the past month.

Ericsson's consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.04. Compared to the company's year-ago EPS, this represents a change of -71.4%. Ericsson currently boasts a Zacks Rank of #3 (Hold).

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