As of July 25, 2023, F5 Inc (FFIV, Financial) has seen a promising gain of 5.44% in its stock price, now trading at $158.38 per share. With a market cap of $9.6 billion, Earnings Per Share (EPS) of $5.4, and sales reaching $2.8 billion, F5 shows robust financial metrics. The GuruFocus Value (GF Value) is pegged at $185.5, indicating that the company is modestly undervalued.
F5, a market leader in the application delivery controller market, offers products for security, application performance, and automation. Established in 1996 and based in Seattle, the company serves three main customer verticals: enterprises, service providers, and government entities. With about 6,500 employees, F5 generates approximately 55% of its revenue within the Americas, 25% in EMEA, and 20% in APAC/Japan.
GF Value and F5's Valuation
The GF Value is a unique measure of a stock's intrinsic worth, calculated based on historical trading multiples, an adjustment factor from GuruFocus based on past performance and growth, and future business performance estimates. F5's current stock price, compared to its GF Value, suggests that the stock may be modestly undervalued. This could imply that the long-term return of F5's stock is likely to be higher than its business growth.
F5's Financial Strength
Investing in companies with solid financial strength reduces the risk of capital loss. F5's financial strength, as indicated by its cash-to-debt ratio of 2.49, ranks worse than 51.44% of companies in the Software industry. However, GuruFocus ranks F5’s financial strength as 7 out of 10, suggesting a fair balance sheet.
Profitability and Growth
Investing in profitable companies, especially those demonstrating consistent profitability over the long term, carries less risk. F5 has been profitable 10 years over the past 10 years. Its operating margin of 15.15% is better than 83.31% of companies in the Software industry, indicating strong profitability. However, the 3-year average annual revenue growth rate of F5 is 6%, which ranks worse than 54.51% of companies in the Software industry.
ROIC vs WACC
Comparing a company’s return on invested capital (ROIC) to its weighted cost of capital (WACC) can provide insights into its profitability. F5's ROIC of 7.19 is lower than its WACC of 8.9 over the past 12 months, suggesting the company may need to improve its efficiency in generating returns on investment.
Conclusion
In conclusion, F5 (FFIV, Financial) stock appears to be modestly undervalued. The company's financial condition is fair, and its profitability is strong. However, its growth ranks lower than most companies in the Software industry. For more detailed financial information about F5, you can check out its 30-Year Financials here.
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