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Chicago, IL – December 18, 2025 – Zacks Equity Research shares Ciena Corporation CIEN, as the Bull of the Day and Jack in the Box JACK, as the Bear of the Day. In addition, Zacks Equity Research provides analysis on — East West Bancorp EWBC, U.S. Bancorp USB and KeyCorp KEY.
Here is a synopsis of all three stocks:
Ciena Corporation, a Zacks Rank #1 (Strong Buy), has seen its shares surge this year as the company benefits from an accelerating transformation driven by artificial intelligence and explosive demand for networking solutions. Ciena is a global technology provider of hardware, software, and related services for network operators.
The stock has broken out to a multi-decade high in 2025 on increasing volume. Shares continue to display relative strength as buying pressure accumulates in this market leader.
Ciena is part of the Zacks Communications - Components industry group, which currently ranks in the top 13% out of approximately 250 Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform over the next 3 to 6 months, just as it has throughout the year:
Take note of the favorable characteristics for this group below. Stocks in this industry are relatively undervalued based on traditional valuation metrics. They are also projected to experience above-average earnings growth, which signifies a powerful combination that should lead to higher prices in the future.
Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.
It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.
In a year where artificial intelligence has reshaped the technology landscape, few companies have captured the momentum quite like Ciena. The networking specialist, a standout in the Zacks Communications - Components industry, has witnessed its shares surge more than 140% year-to-date, significantly outperforming both the broader market and its peers.
The catalyst for the bullish move? Explosive demand for high-speed optical networking solutions driven by AI infrastructure buildouts and cloud expansion. The company's innovations in coherent optics and photonic solutions position it at the heart of the multi-year AI networking cycle, where hyperscalers and service providers invest heavily to support data-intensive applications.
Its optical systems, software, and services power data transmission for telecom providers, cloud companies, and governments, with a primary focus on developing adaptive, AI-ready networks for massive bandwidth demands. Ciena specializes in high-speed connectivity, optical transport, routing, switching, and network automation, helping its clients manage data for 5G, broadband, and data centers.
What stands out is Ciena's consistent ability to deliver positive earnings surprises. Over the last twelve quarters, Ciena has missed the EPS mark just twice. The company delivered a trailing four-quarter average surprise of over 22%, reflecting strong execution in converting AI-driven demand into results. This track record aligns perfectly with the power of the Zacks Rank system, which prioritizes stocks showing upward earnings revisions.
Ciena's transformation has been remarkable. The company reported fiscal fourth-quarter results just last week that exceeded expectations, with adjusted EPS of $0.91 beating the Zacks Consensus Estimate by 18%. Revenue of $1.35 billion topped forecasts by nearly 5% while growing 20% from the year-ago period. Management highlighted record orders, a $5 billion backlog, and market share gains in optical networking, particularly among cloud providers now representing a larger mix of sales.
The Maryland-based company has been the beneficiary of improving earnings estimate revisions as of late. Looking into the current quarter, analysts have raised their fiscal Q1 2026 EPS estimates by 39.47% in the past 60 days. The Zacks Consensus Estimate now stands at $1.06 per share, reflecting better than 65% growth relative to the same period in the prior year. Revenues in the current quarter are projected to climb nearly 30% to $1.39 billion.
CIEN shares have advanced nearly 300% off the April bottom. Only stocks that are in extremely powerful uptrends are able to make this type of price move and widely outperform the market. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.
Notice how shares remain above upward-sloping 50-day (blue line) and 200-day (red line) moving averages. A short-term pullback presents a unique buying opportunity. With both strong fundamentals and technicals, Ciena stock is poised to continue its outperformance.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Ciena has recently witnessed positive revisions. As long as this trend remains intact (and CIEN continues to deliver earnings beats), the stock will likely continue its bullish run through the remainder of this year and beyond.
Currently, Ciena carries a Zacks Rank #1 (Strong Buy), driven by favorable estimate momentum heading into fiscal 2026. Analysts project robust growth, with guidance implying mid-20% revenue expansion and continued margin improvement from scale and mix benefits.
Solid institutional buying should continue to provide a tailwind for the stock price. The Zacks Communications - Components industry itself ranks in the top tier, benefiting from structural tailwinds like fiber densification and data center interconnects. Ciena's leadership here, combined with its earnings beat streak and positive revisions, makes it a compelling choice for investors seeking exposure to AI's ongoing infrastructure boom.
As someone who has followed networking stocks through multiple cycles, it's encouraging to see Ciena not just riding the wave but helping build the foundation for tomorrow's connected world. With a solid backlog providing visibility into 2026 and beyond, this remains a name worth considering for growth-oriented portfolios.
Jack in the Box develops and franchises quick-service restaurants in the United States. The company operates through its hamburger chain (Jack in the Box), and up until recently, a Mexican-American chain under the Del Taco brand.
The restaurant chain closed the sale of its Del Taco brand for $115 million, a massive loss on the more than $575 million the company paid back in 2022. It’s also implementing a block closure program, which is projected to culminate in the closure of approximately 150-200 underperforming restaurants.
Jack in the Box continues to face pressure from weakened consumer demand across income tiers, leading to negative traffic trends. Additionally, higher labor expenses, commodity inflation, along with rising utilities and other operating costs are weighing on profitability.
In the latest quarter, same-store sales for the Jack brand declined 7.4%, with both franchise and company-operated locations posting declines. In addition, a limited international presence might be a big disadvantage for the company and hurt its competitive position. Maintaining liquidity has also become a grueling task amid persistent macroeconomic risks.
A Zacks Rank #5 (Strong Sell) stock, Jack in the Box is a component of the Zacks Retail – Restaurants industry group, which currently ranks in the bottom 24% out of approximately 250 Zacks Ranked Industries. As such, we expect this industry group as a whole to underperform the market over the next 3 to 6 months, just as it has throughout the year:
Stocks in the bottom tiers of industries can often be intriguing short candidates. While individual stocks have the ability to outperform even when they’re part of a lagging industry, the inclusion in a weaker group serves as a headwind for any potential rallies and the journey forward is that much more difficult.
JACK shares have been underperforming the market over the past year. The stock hit a 52-week low last month and represents a compelling short opportunity as we near the end of 2025.
Jack in the Box has fallen short of earnings estimates in two of the past three quarters. Back in November, the company reported fiscal fourth-quarter earnings of 30 cents per share, missing the Zacks Consensus Estimate by a whopping -34.78%.
The hamburger chain has posted a trailing four-quarter average earnings miss of -7.1%. Consistently falling short of earnings estimates is a recipe for underperformance, and JACK is no exception.
The company has been on the receiving end of negative earnings estimate revisions as of late. Looking at the current quarter, analysts have slashed estimates by -20.98% in the past 60 days. The fiscal Q1 Zacks Consensus EPS Estimate is now $1.13 per share, reflecting negative growth of -41.15% relative to the year-ago period.
Falling earnings estimates are a huge red flag and need to be respected. Negative growth year-over-year is the type of trend that bears like to see.
As illustrated below, JACK stock is in a sustained downtrend. Notice how the stock has made a steady series of lower lows this year, widely underperforming the major indices. Also note that shares are trading below downward-sloping 50-day (blue line) and 200-day (red line) moving averages – another good sign for the bears.
JACK stock has experienced what is known as a “death cross,” whereby the stock’s 50-day moving average crosses below its 200-day moving average. Shares would have to make an outsized move to the upside and show increasing earnings estimate revisions to warrant taking any long positions. The stock has fallen more than 50% this year alone.
A deteriorating fundamental and technical backdrop show that this stock is not set to make its way to new highs anytime soon. The fact that JACK stock is included in one of the worst-performing industry groups adds yet another headwind to a long list of concerns.
A history of earnings misses and falling future earnings estimates will likely serve as a ceiling to any potential rallies, nurturing the stock’s downtrend.
Potential investors may want to give this stock the cold shoulder, or perhaps include it as part of a short or hedge strategy. Bulls will want to steer clear of JACK until the situation shows major signs of improvement.
This year has had no shortage of surprises for investors. It began with optimism as President Donald Trump’s return fueled expectations of a more business-friendly environment. That confidence was shaken in April by the much-publicized “Liberation Day” tariff rollout, which rattled markets and created significant volatility.
Since then, markets have mounted a strong recovery, reaching record highs, supported by the Federal Reserve’s interest rate cuts. The central bank has lowered rates by 75 basis points this year and is expected to deliver another cut in 2026. This is expected to support the bank’s net interest income (NII) as funding costs stabilize and loan demand improves.
With lower rates, deal-making activities are also expected to accelerate further in 2026, after witnessing a strong rebound this year. Hence, banks are expected to record a decent rise in revenues. Investors looking to position ahead of this potential upswing may want to consider East West Bancorp, U.S. Bancorp and KeyCorp as compelling plays on the sector’s next phase of growth.
Beyond the macro tailwinds, banks have been focusing on artificial intelligence (AI) and technology to enhance their client experience and expand their presence online to capture a rising mobile banking population. Strategic buyouts and collaborative efforts to deepen global presence and diversify revenue streams will further bolster fee incomes.
At the same time, consumer spending remains resilient while credit demand is showing early signs of recovery, and delinquency rates have eased from their peaks despite some occasional strains. Adding to the optimism, the Fed expects U.S. economic growth to accelerate in 2026, with inflation moderating further and unemployment edging lower. Overall, bank stocks appear well-positioned to benefit from a more favorable operating environment in 2026.
We shortlisted the above-mentioned three bank stocks with the help of the Zacks Stock Screener. These stocks have a Zacks Rank of 2 (Buy) and a market cap of more than $10 billion. Further, these companies’ earnings are expected to grow more than 5% in 2026.
The chosen banks have performed well in the past year (up more than 10%) and have further upside potential. This optimistic stance signifies bullish analyst sentiments, reflecting solid fundamentals and expectations of outperformance.
East West Bancorp, based in Pasadena, CA, serves as a financial bridge between the United States and China by providing various consumer and commercial banking services to the Asian-American community. The company operates through more than 110 locations in the United States and China. As of Sept. 30, 2025, East West Bancorp had $79.7 billion in total assets, $55 billion in net loans held for investment, and $66.6 billion in total deposits.
Decent loan demand, down-rate protection hedge programs, focus on improving fee income, acquiring low-cost deposits, and stabilizing funding costs are likely to support East West Bancorp’s revenues in the upcoming period.
Given solid liquidity and earnings strength, the company has been paying dividends regularly and has hiked its dividends five times in the past five years, with a dividend payout ratio of 26%.
EWBC’s earnings are projected to witness year-over-year growth of 13.4% this year and 7.4% in 2026. Over the past 60 days, earnings estimates for 2025 and 2026 have been revised 4.1% and 3.9% upward, respectively. The company has a market cap of $15.6 billion and currently carries a Zacks Rank #2.
U.S. Bancorp: Headquartered in Minneapolis, MN, the company provides banking and investment services, mainly operating in the midwestern and western regions of the United States. The company has expanded through several acquisitions over the years, which have strengthened its market position, digital capabilities and diversified revenue streams.
In the past few years, USB has acquired Salucro Healthcare Solutions LLC, MUFG Union Bank’s core franchise and fintech platforms. In June 2025, USB partnered with Fiserv to integrate its Elan Financial Services credit card program into Fiserv’s Credit Choice Solution. These efforts will continue to strengthen the company’s fee-based businesses.
Additionally, the company’s NII has been rising over the past few years. Going forward, investment portfolio repositioning, less deposit migration, lower rates, and stabilizing funding costs will continue to support NII expansion. U.S. Bancorp is experiencing solid growth in average loans and deposits in recent years as it expands relationships with existing customers and acquires new ones.
Given solid liquidity position and earnings strength, the company has been paying dividends regularly and has hiked its dividends five times in the past five years, with a dividend payout ratio of 47%.
USB, which currently carries a Zacks Rank of 2, has a market cap of $83.5 billion. Over the past 60 days, earnings estimates for 2025 and 2026 have been revised 1.8% and 1.5% upward, respectively. The Zacks Consensus Estimate for earnings indicates growth of 14.1% this year and 7.1% for 2026.
KeyCorp: Headquartered in Cleveland, OH, the company offers an extensive suite of financial products and services, including commercial and retail banking, investment management, consumer finance, commercial leasing, and investment banking solutions. As of Sept. 30, 2025, KeyCorp had $187.4 billion in total assets, $105.9 billion in loans, and $150.8 billion in deposits.
KeyCorp is well-positioned to benefit from solid loan and deposit balances, rising NII, and its efforts to strengthen fee income. KEY’s business expansion efforts are commendable. Given the buyouts/expansion initiatives, it has strengthened its product suites and market share. The company is expected to continue with opportunistic acquisitions, which are likely to help diversify revenues. Also, as demand for digital banking services continues to rise, it has been consolidating its branch network, with management looking for opportunities to right-size its footprint.
KEY maintains a strong liquidity and capital position, which enables it to pay out regular dividends. The company hiked its dividends twice in the past five years, with a dividend payout ratio of 56%.
Key, which carries a Zacks Rank of 2 at present, has a market cap of $22.4 billion. The Zacks Consensus Estimate for earnings indicates growth of 27.6% this year and 19.6% for 2026. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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This article originally published on Zacks Investment Research (zacks.com).
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