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Harmonic: Q2 Earnings, Strong Beats All Around, But Investors Will Need More

Aug. 02, 2022 11:13 AM ETHarmonic Inc. (HLIT)4 Comments


  • Harmonic's Q2 earnings were exactly the type of results that investors welcome, as it delivers the trifecta: beats on the top and bottom lines, with compelling guidance.
  • This led its stock to jump nearly 10% at the open. But as we look ahead, is this enough to get new shareholders interested in the stock?
  • I fail to be enticed to pay 18x next year's EPS for Harmonic.
  • Furthermore, from a free cash flow perspective, the business is too capital intensive to support a high multiple on its stock.
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Investment Thesis

Harmonic (NASDAQ:HLIT) reported very strong Q2 results that saw its top line jump 39% y/y. Clearly, this is welcome news for shareholders of a stock that has been highly volatile throughout 2022.


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Comments (4)

HLIT has been developing the broadband business with Comcast for several years. They have provided updates on their progress quarterly on conference calls which can be read in the transcripts on this site.

In the past six weeks what has changed is that Comcast has talked quite a bit about their Cap Ex plans and their DOCSIS 4.0 system upgrade to a virtualized cloud based using DAA. I would point to articles below and more on this topic as reason behind recent stock strength.




Analyst Day presentation from 9/15 on the Harmonic website shows some pretty impressive CAGR in broadband and Video SaaS. Talking about growing the broadband (cable OS) and biz 10 fold to $825mm by 2025 w >50% gross margins.


Comcast release at SCTE this week seems major endorsement for their continued “investment “ in HLIT system and software confirming HLIT broadband rev forecasts

The Fiber to the home slide on the Analyst Day presentation gives me optimism for upside.
Hiramw profile picture
I do not look at earnings are a clear signal of the correct valuation. The revenue growth numbers and p/ sales are more meaningful. Supply issues and inflation are putting pressure on the growth multiples. They will overcome this eventually I am a HLIT investor since 1998.
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