Stocks, bonds, ETFs, straight out of downtown Chicago. This is Zach's Market Edge. Welcome to Zach's Market Edge, the podcast about investing in your life.I'm your host, Tracy Reinick, and this week I have a guest. As promised, Zach's small cap analyst, Mark Zinski, is back on the podcast, and he's bringing us those small cap stocks. Now remember the difference between Mark and myself.Mark is actually an analyst. I'm just a strategist. So I look at the bigger picture.Mark is actually looking at these compan ...

Core Viewpoint - Zacks Investment Research has initiated coverage of Optical Cable Corporation (OCC) with an "Outperform" recommendation, indicating potential for the company to outperform the broader market as demand trends improve and operating leverage emerges [1] Company Overview - Optical Cable designs and manufactures fiber-optic and copper cabling and connectivity solutions for enterprise networks, data centers, and specialized environments, serving customers in approximately 50 countries [2] Demand and Revenue Growth - The investment case is centered on improving demand visibility and accelerating revenue growth, highlighted by a significant increase in order backlog, which reached approximately $10.4 million at the end of January 31, 2026, compared to $7.3 million in the prior quarter and $6.6 million in the year-ago period [3] - International sales increased roughly 18% year over year in the most recent quarter, significantly outpacing domestic trends, indicating growing traction for the company's products in global infrastructure markets [6] Strategic Partnerships - A collaboration with Lightera, established in July 2025, allows Optical Cable to combine product portfolios, broadening the range of fiber and connectivity solutions for enterprise and data infrastructure projects [4] Market Exposure - The company benefits from exposure to multiple infrastructure-related end markets, including enterprise networking, industrial environments, renewable energy projects, broadcast infrastructure, and military applications, providing resilience due to varying demand cycles across these industries [5] Valuation Perspective - The stock is currently trading at about 0.97 times trailing 12-month enterprise value to sales, in line with the Zacks Fiber Optics subindustry but below the broader technology sector and S&P 500, which trade at significantly higher multiples [9] - Shares are trading at approximately 4.3 times book value, again below sector averages [9]

Financial Performance - Consolidated net sales for Q1 FY 2026 increased 4.4% to $16.4 million, compared to $15.7 million in Q1 FY 2025[3] - Gross profit rose 16.1% to $5.4 million, with a gross profit margin of 32.7%, up from 29.4% in the same period last year[5] - Net sales to international customers increased by 18.0%, while U.S. sales grew by less than 1%[4] - Sales order backlog increased over 50% to $10.4 million compared to $7.3 million as of October 31, 2025[4][8] - The company recorded a net loss of $0.05 per share, an improvement from a net loss of $0.14 per share in Q1 FY 2025[7] Expenses and Assets - SG&A expenses rose to $5.6 million, up from $5.5 million in Q1 FY 2025, primarily due to increased personnel and shipping costs[7] - Total current assets decreased to $29.6 million from $30.8 million as of October 31, 2025[20] - Total liabilities decreased to $17.7 million from $18.5 million as of October 31, 2025[20] - Total shareholders' equity increased to $18.1 million from $16.5 million as of October 31, 2025[20] Future Outlook - The company is optimistic about growth in FY 2026, particularly in the data center market, and remains focused on disciplined execution[8]

Core Insights - Optical Cable (NASDAQ:OCC) reported a strong start to fiscal 2026, driven by increased demand in enterprise and specialty markets, improved gross margins, and a significant rise in sales order backlog and forward load [1] Financial Performance - For the first quarter ended January 31, 2026, consolidated net sales rose by 4.4% to $16.4 million, compared to $15.7 million in the same quarter last year, attributed to general market improvements and strength in the severe-duty market [2] - Gross profit increased by 16.1% to $5.4 million from $4.6 million a year earlier, with gross margin expanding to 32.7% from 29.4%, benefiting from higher volumes and operating leverage [3] - SG&A expenses were $5.6 million, slightly up from $5.5 million in the prior-year quarter, with SG&A as a percentage of net sales improving to 33.8% from 34.7% [4] Backlog and Market Outlook - Sales order backlog and forward load climbed over 50% to $10.4 million at the end of the quarter, up from $6.6 million at the end of the first quarter of fiscal 2025, indicating strong future demand [5] - The company anticipates building on this momentum, particularly in the data center market, despite typical seasonality affecting the first half of the fiscal year [5] - Data center activity is increasing, with significant customer requests for quotes noted in January, suggesting ongoing growth in this sector as the company enters fiscal Q2 [6]

Financial Data and Key Metrics Changes - Consolidated net sales for Q1 of fiscal 2026 increased by 4.4% to $16.4 million compared to $15.7 million for the same period last year [7] - Gross profit increased by 16.1% to $5.4 million in Q1 of fiscal 2026 compared to $4.6 million for the same period last year, with gross profit margin rising to 32.7% from 29.4% [9][10] - Sales order backlog and forward load increased more than 50% to $10.4 million as of the end of Q1 compared to $6.6 million for the same period last year [5][9] Business Line Data and Key Metrics Changes - Net sales in both enterprise and specialty markets increased compared to the same period last year, with net sales to customers outside the United States rising by 18% [8] - SG&A expenses increased to $5.6 million in Q1 of fiscal 2026, compared to $5.5 million for the same period last year, but as a percentage of net sales, it decreased to 33.8% from 34.7% [10] Market Data and Key Metrics Changes - The company experienced growth in the data center market, with significant activity and customer requests for quotes particularly noted in January [13] - The overall market improvements in the industry were reflected in the sales growth, particularly in the severe-duty market [8][16] Company Strategy and Development Direction - The company is focused on disciplined execution to drive value for customers and shareholders, with a strong emphasis on growth in targeted markets, especially the data center sector [5][14] - The strategic collaboration with Lightera is expected to enhance product offerings and generate additional revenue opportunities [17][23] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about potential sales growth for fiscal year 2026, citing increased sales order backlog and forward load as positive indicators [14][28] - The company expects the second half of fiscal 2026 to show further growth, building on the momentum from the first quarter [27] Other Important Information - The company is currently hiring in manufacturing operations to meet anticipated personnel needs for fiscal year 2026 [22] - Management noted that the collaboration with Lightera has already begun to generate more opportunities, contributing to revenue growth [23] Q&A Session Summary Question: Update on project delays - Management indicated that there are currently no significant project delays impacting results [33] Question: Backlog growth not translating into revenue growth - Management explained that backlog is a measurement at a point in time and noted that sales increased by 9.5% in total during fiscal year 2025, with strong sales in Q3 and Q4 [35]

Financial Performance - Consolidated net sales for the first quarter of fiscal year 2026 increased 4.4% to $16.4 million, compared to $15.7 million for the same period last year[107]. - Gross profit increased 16.1% to $5.4 million in the first quarter of fiscal year 2026, compared to $4.6 million for the first quarter of fiscal year 2025[107]. - Gross profit margin increased to 32.7% during the first quarter of fiscal year 2026, compared to 29.4% for the first quarter of fiscal year 2025[107]. - SG&A expenses were $5.6 million during the first quarter of fiscal year 2026, compared to $5.5 million for the same period last year[107]. - Net loss was $398,000, or $0.05 per share, during the first quarter of fiscal year 2026, compared to $1.1 million, or $0.14 per share, for the comparable period last year[107]. - Loss from operations improved to $208,000 in Q1 FY 2026, compared to a loss of $852,000 in Q1 FY 2025[123]. - Net loss for Q1 FY 2026 was $398,000, or $0.05 per share, compared to a net loss of $1.1 million, or $0.14 per share, in Q1 FY 2025[131]. Sales and Orders - Sales order backlog increased to $10.4 million at the end of Q1 FY 2026, up from $7.3 million as of October 31, 2025[114]. - Consolidated net sales for Q1 FY 2026 increased 4.4% to $16.4 million, compared to $15.7 million in Q1 FY 2025[112]. - Gross profit rose 16.1% to $5.4 million, with a gross profit margin of 32.7% in Q1 FY 2026, up from 29.4% in Q1 FY 2025[116]. - SG&A expenses increased by 1.8% to $5.6 million, representing 33.8% of net sales in Q1 FY 2026, down from 34.7% in Q1 FY 2025[118]. Assets and Liabilities - Total assets decreased by $1.3 million, or 3.2%, to $38.8 million at January 31, 2026[132]. - Total liabilities decreased by $820,000, or 4.4%, to $17.7 million at January 31, 2026[133]. - Cash totaled $126,000 as of January 31, 2026, a decrease of $112,000 compared to $238,000 as of October 31, 2025[137]. Cash Flow and Financing - Net cash provided by operating activities was $1.2 million in Q1 FY 2026, down from $2.7 million in Q1 FY 2025[140]. - As of January 31, 2026, the outstanding balance on the Virginia Real Estate Loan is $2.6 million[148]. - The Revolver with North Mill Capital LLC has an outstanding borrowing of $4.6 million and available credit of $4.7 million as of January 31, 2026[153]. - The maximum aggregate principal amount subject to the Revolver is $18.0 million, with interest accruing at 8.25% as of January 31, 2026[150]. - The company anticipates capital expenditures of $1.0 million for the fiscal year 2026, to be funded from working capital or borrowings under the Revolver[154]. - The company believes future cash flow from operations and existing credit facilities will be adequate to fund operations for at least the next twelve months[157]. - The Revolver requires a lockbox arrangement, which sweeps all cash receipts daily to reduce the outstanding balance[151]. - The maturity date for the Virginia Real Estate Loan is May 5, 2026, and the company intends to refinance the obligation prior to maturity[145]. - The Revolver has a maturity date of July 24, 2027, and the company expects to continue borrowing to fund operations[151]. - The company has not reported any material adverse changes that would trigger a default under the Revolver[151]. Strategic Initiatives - OCC entered into a strategic collaboration agreement with Lightera, LLC to expand product offerings, with Lightera purchasing 642,199 redeemable restricted shares representing approximately 7.3% of OCC's outstanding common shares[101]. - The company primarily manufactures fiber optic cables at its Roanoke facility, which is ISO 9001:2015 registered[97]. - OCC's product offerings include fiber optic and copper cabling, hybrid cabling, connectors, and various connectivity management accessories[95]. - The company is recognized for pioneering the design and production of fiber optic cables for military applications and innovative copper connectivity technology[96]. - OCC's sales to customers outside of the United States are denominated in U.S. dollars, which can lead to fluctuations based on exchange rates and tariffs[104]. Accounting Standards - New accounting standards adopted include ASU 2023-07, effective for annual reporting periods beginning after December 15, 2023, which requires enhanced segment disclosures[161].

Core Insights - OCC has appointed Tim Lipscomb from Cboe Global Markets as an Exchange Director on its Board of Directors [1] Company Developments - The appointment of Tim Lipscomb is expected to enhance the governance and strategic direction of OCC [1] - Tim Lipscomb brings significant experience from Cboe Global Markets, which may contribute to OCC's operational effectiveness [1]

Core Insights - Huntington Bancshares Incorporated (HBAN) has received regulatory approval from the Office of the Comptroller of the Currency (OCC) to proceed with its merger of Cadence Bank (CADE), with the transaction expected to close on February 1, 2026, pending shareholder approvals and customary closing conditions [1][10] Financial Details - The merger is structured as a 100% stock transaction valued at approximately $7.4 billion, where HBAN will issue 2.475 shares of common stock for each outstanding share of CADE common stock [2][10] - The deal is anticipated to be 10% accretive to Huntington's earnings per share, although it is projected to be modestly dilutive to regulatory capital at closing and 7% dilutive to tangible book value per share, with the dilution expected to be recovered within three years [3] Strategic Rationale - The merger will add over 390 Cadence branches, positioning the combined bank as the fifth-largest by deposit market share in Dallas and Houston, and eighth statewide in Texas [4] - Huntington is expected to enter the top 10 banks by deposits in Alabama and Arkansas, enhancing its competitive positioning in these growing regions [4] Geographic Expansion - The acquisition significantly broadens Huntington's geographic reach beyond its Midwest base, allowing it to operate across 21 states and maintain a presence in 12 of the 25 largest U.S. metropolitan areas [5][10] Inorganic Growth Strategy - Huntington has been expanding its footprint through a series of acquisitions, including the planned acquisition of advisory and trading units from Janney Montgomery Scott LLC, which will enhance its advisory and capital markets capabilities [6] - Previous acquisitions, such as Veritex Holdings, Capstone Partners, and the merger with TCF Financial, have also contributed to Huntington's growth and operational efficiency [7][8][9] Market Performance - Over the past six months, shares of Huntington have increased by 10.2%, outperforming the industry growth of 7.9% [11]

Core Insights - Citigroup, Inc. has received significant regulatory relief as the OCC removed the July 2024 amendment to its 2020 consent order, which was focused on deficiencies in risk management, data governance, internal controls, and compliance [1][2] - The removal of the amendment indicates progress in the areas it targeted, allowing Citigroup to advance its transformation plan without additional regulatory burdens [2][5] Regulatory Developments - The OCC stated that the amendment was no longer necessary for the bank's safety or compliance, reflecting tangible improvements in Citigroup's operations [2] - The broader 2020 consent order remains in effect, but the removal of the amendment alleviates management's reporting and governance burdens [2][5] Transformation Strategy - Citigroup is modernizing its technology and control data, reducing reliance on external IT contractors while increasing internal technology staff [3] - The bank is investing in automation across various functions, aiming to minimize manual processes that have historically led to control weaknesses [3][5] Progress and Future Outlook - Recent actions signal growing regulatory confidence in Citigroup's ability to execute its remediation and transformation plans [5] - Management has emphasized that transformation is a top priority, with most programs now at or near target states, enabling the bank to benefit from standardized, automated, and digitized controls [5] Market Performance - Citigroup's shares have increased by 44.7% over the past six months, outperforming the industry average rise of 21.7% [11]

Financial Performance - Consolidated net sales for fiscal year 2025 increased 9.5% to $73.0 million, compared to $66.7 million for fiscal year 2024[3] - Gross profit increased 24.1% to $22.6 million in fiscal year 2025, with a gross profit margin of 30.9%, up from 27.3% in fiscal year 2024[5] - Net sales to customers in the United States increased 10.4%, while net sales to customers outside the United States increased 6.5% in fiscal year 2025[3] - For the fourth quarter of fiscal year 2025, consolidated net sales increased 1.8% to $19.8 million compared to $19.5 million for the same period in the prior year[7] - Gross profit for the fourth quarter of fiscal year 2025 decreased slightly to $6.3 million, with a gross profit margin of 31.9%[8] Expenses - SG&A expenses totaled $23.0 million in fiscal year 2025, up from $21.5 million in fiscal year 2024[6] - SG&A expenses in the fourth quarter of fiscal year 2025 increased to $6.0 million, compared to $5.9 million for the same period in fiscal year 2024[10] Net Loss - The company recorded a net loss of $1.5 million, or $0.18 per share, for fiscal year 2025, an improvement from a net loss of $4.2 million, or $0.54 per share, in fiscal year 2024[6] Strategic Initiatives - The company entered into a strategic collaboration with Lightera, LLC in July 2025 to expand product solutions offerings and growth opportunities[11] Management Outlook - Management expressed optimism about continued growth in fiscal year 2026 and beyond, highlighting strong positioning in target markets[12]