OCC · Optical Cable
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $14.88
Note written ·
Price against the kill line
29.6% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $14.88, on record since 11 November 2026. The shares are down 38.8% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $14.88, about 30% over the 11 November 2026 close and near the 50-day average of $13.68 plus a further gain, which would show the shares leading the S&P 500 again. Fourth-quarter sales growth above 22.0% with backlog above $13.5 million would show the same.
Research onlyNot in the portfolio.
Key figures from the filings · Materials
Quarter to 31 July 2026, filed 9 September 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 24.3
- Revenue, change on a year (%)
- +22.0
- Gross margin (%)
- 37.4
- Operating margin (%)
- 8.7
- Free cash flow, four quarters ($M)
- 0.4
- Net cash, cash less debt ($M)
- −8.7
- Price to earnings (×)
- 36.1
- Enterprise value to sales (×)
- 1.2
All filed numbers
What Optical Cable reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 24.3 | +22.0 | 37.4 | 8.7 |
| first filed | 22.2 | +26.6 | 34.2 | 5.9 |
| first filed | 16.4 | +4.4 | 32.7 | −1.3 |
| first filed | 19.8 | +1.8 | 31.9 | 1.4 |
| first filed | 19.9 | +22.8 | 31.7 | 2.8 |
| first filed | 17.5 | +8.9 | 30.4 | −2.4 |
| Pre-tax income ($M) | 1.9 |
| Net income ($M) four quarters: 2.6 | 1.9 |
| Diluted shares, change on a year (%) | Not reported |
| Operating cash flow ($M) | 0.9 |
| Capital spending ($M) | 0.5 |
| Free cash flow ($M) | 0.4 |
| Cash and short-term investments ($M) | 0.3 |
| Debt ($M) notes plus loans | 9.0 |
| Net cash, cash less debt ($M) | −8.7 |
| Deferred revenue ($M) −6.7% on a year | 0.3 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 11.8 |
| Inventory ($M) | 22.9 |
| Shareholders' equity ($M) | 14.7 |
| Market value ($M) | 92.6 |
| Enterprise value, market value plus net debt ($M) | 101 |
| Enterprise value to sales (×) | 1.2 |
| Enterprise value to operating income (×) | 29.1 |
| Price to earnings (×) | 36.1 |
| Price to book value (×) | 6.3 |
| Free-cash-flow yield (%) | 0.5 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 6.4% of shares outstanding sold short, 4.4 days of average trading to cover, −2.3% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $0 |
| 12 monthsfrom | $0 | $284K |
The thesis
Optical Cable Corporation is more likely to lag the S&P 500 over the next three months. Its reported growth is strong, but backlog barely rose in the July quarter and the shares sit below both their 50-day and 200-day averages. The fourth-quarter report, expected around 17 December 2026, settles whether backlog and sales growth resume.
The company's 9 September 2026 release showed third-quarter fiscal 2026 sales up 22.0% to $24.3 million and gross margin up to 37.4% from 31.7%. Net income was $1.9 million, or $0.21 per share. Backlog and forward load was $13.5 million on 31 July 2026, up only $0.2 million from $13.3 million on 30 April 2026 (third-quarter Form 10-Q).
Company news and SEC filings show no disclosure since the 10-Q filed on 9 September 2026. The shares fell anyway: the quoted close was $16.63 on 13 August 2026, and the price context shows a 3-month change of −31.1% to $11.45 on 11 November 2026.
Bullish and bearish views on Optical Cable Corporation
The bull case on Optical Cable Corporation (OCC), in brief: sales and margins are rising together. The bear case: backlog growth has nearly stopped.
Bull case
- Sales and margins are rising together. Third-quarter net sales rose 22.0% to $24.3 million and gross profit rose 43.9% to $9.1 million (company release, 9 September 2026). Over nine months, gross profit rose 35.5% to $22.1 million on sales up 18.3% to $62.9 million.
- The business has turned profitable. Nine-month net income was $2.5 million, or $0.28 per share, against a $1.5 million loss a year earlier (company release, 9 September 2026).
- The fourth-quarter comparison is easy. Fourth-quarter fiscal 2025 sales rose only 1.8% to $19.8 million (company release, 18 December 2025), well below the $24.3 million of the third quarter of fiscal 2026.
- The order book is far above last year's. Backlog and forward load was $13.5 million on 31 July 2026, against $7.3 million on 31 October 2025 (third-quarter Form 10-Q).
- Demand exceeds supply. Management called optical fiber shortages, driven by data-center demand, the main bottleneck to a faster ramp (earnings call, 9 September 2026). Orders that cannot yet ship are deferred sales.
Bear case
- Backlog growth has nearly stopped. Backlog rose from $10.4 million on 31 January 2026 to $13.3 million on 30 April 2026, then only to $13.5 million on 31 July 2026 (Form 10-Q filings). A flat order book gives less to drive fourth-quarter growth.
- Fiber shortages cap shipments. Management expects the shortage to persist in the near term (earnings call, 9 September 2026).
- Sales missed the consensus estimate. Third-quarter sales of $24.297 million came in under the $24.5 million estimate, while earnings of $0.21 per share beat the $0.20 estimate (Benzinga, 9 September 2026).
- The valuation was high before the fall. The price-to-earnings ratio stood at 52.2 against a communications-equipment industry median of 35.1 (AAII, 13 October 2026), when the adjusted close was $15.35.
- The share price is volatile. The close fell from $11.21 on 4 November 2026 to $8.96 on 5 November 2026 with no company announcement, then rose to $11.45 by 11 November 2026 (adjusted daily closes).
Price setup
The last close was $11.45 on 11 November 2026. That is below the 50-day average of $13.68 and below the 200-day average of $12.50 (adjusted daily closes). It is 59.1% under the 52-week intraday high of $27.98 set on 11 June 2026. The 52-week closing low is $4.16, from 9 January 2026.
The shares closed at $8.96 on 5 November 2026 and recovered to $11.45 over the next four sessions. A close above the 200-day average would start to repair the trend. The 50-day average sits $2.23 above the last close.
Lightera, a fiber maker, has held about 7.24% of the shares since a $2.0 million purchase on 7 July 2025. No Form 4 insider transactions appear in recent SEC filings. With about 8.83 million shares outstanding, the shares can move sharply on low volume, so a single session carries little information.
Catalysts ahead
- ~17 December 2026 (est.): Fourth-quarter and full-year fiscal 2026 report (date unconfirmed; fiscal 2025 results came on 18 December 2025). Shows whether sales growth near 22% and gross margin near 37% held against an easy $19.8 million year-earlier quarter, and whether backlog grew from $13.5 million.
What would change the view
A daily close above $14.88, about 30% over the 11 November 2026 close and near the 50-day average of $13.68 plus a further gain, which would show the shares leading the S&P 500 again. Fourth-quarter sales growth above 22.0% with backlog above $13.5 million would show the same.
What it trades with
Optical Cable sells fiber and copper cabling and connectivity, and its recent growth is tied to data-center build-outs. It shares that demand driver with larger optical and networking names. As a microcap with thin trading, its October and November 2026 moves came without company news, so sector moves explain little of them. Competition for optical fiber supply is a shared exposure: the shortage that limits its shipments reflects the demand behind its orders.
The evidence, claim by claim (8)
- Third-quarter fiscal 2026 net sales rose 22.0% to $24.3 million; gross profit rose 43.9% to $9.1 million and gross margin rose to 37.4% from 31.7%. Company Q3 FY2026 earnings release (8-K Exhibit 99.1) · as of
- Third-quarter net income was $1.9 million, or $0.21 per share, against $302,000, or $0.04 per share, a year earlier. Company Q3 FY2026 earnings release (8-K Exhibit 99.1) · as of
- Backlog and forward load was $13.5 million, against $13.3 million on 30 April 2026, $10.4 million on 31 January 2026 and $7.3 million on 31 October 2025. Company Q3 FY2026 Form 10-Q · as of
- Nine-month net sales rose 18.3% to $62.9 million, gross profit rose 35.5% to $22.1 million, and net income was $2.5 million ($0.28 per share) against a $1.5 million loss a year earlier. Company Q3 FY2026 earnings release (8-K Exhibit 99.1) · as of
- Fourth-quarter fiscal 2025 net sales rose 1.8% to $19.8 million; full-year fiscal 2025 sales rose 9.5% to $73.0 million with a net loss of $1.5 million. Company Q4 FY2025 earnings release · as of
- Third-quarter earnings per share of $0.21 beat the $0.20 estimate; sales of $24.297 million missed the $24.5 million estimate. Benzinga · as of
- Management called optical fiber shortages, driven by data-center demand, the main bottleneck to a faster production ramp and expects the shortage to persist in the near term. Q3 FY2026 earnings call · as of
- The close fell from $11.21 on 4 November 2026 to $8.96 on 5 November 2026 and was $11.45 on 11 November 2026; the 50-day average was $13.68 and the 200-day average $12.50. Adjusted daily closes · as of
Sources
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