VIAV

VIAVI is executing an operational turnaround. FY2025 revenue rose 8.4% to $1.08B (up $83.9 million), GAAP operating income jumped 176.4% to $57.5M (operating margin up 320 bps to 5.3%), and net income swung to $34.8M from a $25.8M loss in FY2024. Management attributes the NSE growth to strong demand from the data-center ecosystem for fiber and data-center buildouts plus aerospace and defense, partially offset by weak wireless and cable spend. Gross margin is healthy at 57.3% and the company reports a much higher non-GAAP operating margin of 14.2%, so the underlying business is more profitable than the thin GAAP line suggests.

The problem is price. At $47.17 the stock trades at 314.5x GAAP diluted EPS of $0.15 and 9.7x sales on a $10.5B market cap — extraordinary multiples for a network-test and optical-components company whose revenue is still below the $1.20B and $1.29B it posted in FY2021 and FY2022. Even crediting the non-GAAP framing, the GAAP earnings base is tiny relative to the valuation, ROE is just 4.5%, and operating cash flow actually fell 22.9% to $89.8M. There is very little margin for execution error embedded in this price.