Can COMM Sustain Its Impressive EBITDA Margin Performance?

CommScope Holding Company, Inc. COMM reported a non-GAAP adjusted EBITDA of $402.5 million, up from $204.2 million a year ago. The adjusted EBITDA margin expanded to 24.7% from 18.9% a year ago. The 97% uptick year over year is primarily driven by top-line growth.

The Access Network Solutions sales jumped 77% year over year to $338 million, while the segment’s adjusted EBITDA surged 169%. This substantial growth is backed by growing deployments of DOCSIS 4.0 amplifier and node products. The ANS segment boasts a portfolio consisting of DOCSIS 3.1, 3.1E and DOCSIS 4.0 solutions. The comprehensive product suite effectively supports all areas of hybrid coaxial fiber network architecture.

RUCKUS revenues rose 15% year over year to $178.5 million, while segment EBITDA was up 38% year over year. The growth was primarily driven by healthy demand for our Wi-Fi 7 products and subscription services. Moreover, the company has also secured U.S. federal government certification across its ICX product line. This will boost sales to U.S. federal customers. CCS segment revenues grew 51% year over year to $1.1 billion, backed by the strong cloud and datacenter growth.

The company’s adjusted operating expenses as a percentage of sales declined to 17.9% in the third quarter of 2025 compared to 23.6% in the year-ago quarter. The company expects the solid momentum to continue in the upcoming quarters. Management has raised its Adjusted EBITDA guidance. For the full year, it currently expects adjusted EBITDA in the range of $1.3-$1.35 billion compared to $1.15-$1.2 billion estimated earlier.

Taking a Look at Profitability Numbers for Competitors

CommScope faces competition from Corning Incorporated GLW and Ubiquiti Inc. UI. During the third quarter, Ubiquiti’s operating income was $261.7 million, up from $169.2 million in the prior year. Solid top-line growth is boosting margins. Ubiquiti is witnessing healthy traction in the Enterprise Technology segment, driven by the growing proliferation of IoT devices across industries.

Corning’s operating income rose to $589 million from $302 million in the year-ago quarter. Operating margin expanded 130 basis points to 19.6%. Strong focus on improving efficiency, sales growth in high-margin verticals is propelling this growth. Strong demand for Gen AI products in the Enterprise Network Business and growing adoption of Corning gorilla glass in premium smartphones are driving growth. Management is optimistic about achieving its 20% operating margin target in the fourth quarter of 2025, one year ahead of plan.

COMM’s Price Performance, Valuation and Estimates

CommScope shares have gained 211.5% over the past year compared with the industry’s growth of 118.4%.

From a valuation standpoint, CommScope trades at a forward price-to-sales ratio of 0.65, below the industry.

Earnings estimates for 2025 have increased 27.9% to $1.65 over the past 60 days, while the same for 2026 have also increased 11.1% to $1.80.

CommScope currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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