Why Harmonic Stock Is Soaring Today

Shares of video-streaming technology company Harmonic (NASDAQ: HLIT) skyrocketed today after the company reported better-than-expected second-quarter results.

Revenue and earnings surpassed Wall Street's expectations, leading to investors rushing in to buy the stock. Harmonic's shares were up by 20.1% as of 11:32 a.m. ET.

Falling revenue and earnings, but ahead of estimates

Harmonic generated revenue of $138.7 million, which was down from $156 million in the year-ago quarter, but second-quarter sales were slightly better than Wall Street estimates and were at the high end of Harmonic management's projected range of between $125 million and $140 million.

The company's non-GAAP (adjusted) earnings per share of $0.08 were down from Q2 2023 earnings of $0.12, which was still good enough to easily outpace analysts' consensus estimate of $0.04 for the quarter. The significant earnings beat for the second quarter was likely a big factor in Harmonic's share price jump today.

Additionally, management noted that video profitability is improving, with Harmonic's video segment gross margins increasing to 64.4%, up from 61.7% in the year-ago quarter. Investors have been eager to see improvements from the company's video business, which likely contributed to some of the enthusiasm today.

Management reaffirmed its outlook

Harmonic's leadership reaffirmed its full-year sales outlook for its video and broadband segments. Management estimates fiscal 2024 sales to be between $645 million and $695 million. That would represent an increase of about 10% from 2023 at the midpoint of guidance.

Despite its revenue potential for the full year and its big share price gains today, investors should still be cautious before buying Harmonic stock. The company just installed a new CEO last month, and revenue and earnings were down year over year, making this a precarious time to invest in a company.

It may be best to see how the next few quarters shake out for Harmonic before considering picking up shares.

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .