Long-established in the Hardware industry, Extreme Networks Inc (EXTR, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a decline of 9.83%, juxtaposed with a three-month change of 37.05%. Fresh insights from the GuruFocus Score Rating hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Extreme Networks Inc.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- 1. Financial strength rank: 6/10
- 2. Profitability rank: 4/10
- 3. Growth rank: 4/10
- 4. GF Value rank: 1/10
- 5. Momentum rank: 6/10
Based on the above method, GuruFocus assigned Extreme Networks Inc the GF Score of 62 out of 100, which signals poor future outperformance potential.
Extreme Networks Inc: A Snapshot
Extreme Networks Inc provides software-driven networking services for enterprise customers. Its products include wired and wireless network infrastructure equipment and software for network management, policy, analytics, and access controls. It offers high-density Wi-Fi, centralized management, cloud-based network management, and application analytics capabilities. The company operates in a single segment which develops and markets network infrastructure equipment. Roughly half of the firm's revenue is generated in the Americas, with the rest coming from Europe, the Middle East, Africa, and Asia-Pacific. The company has a market cap of $3.19 billion and sales of $1.31 billion, with an operating margin of 8.5%.
Profitability Concerns
Extreme Networks Inc's low Profitability rank can also raise warning signals. This indicates that the company's profitability is lower than other companies in the industry, which could impact its ability to generate returns for investors.
Growth Prospects
A lack of significant growth is another area where Extreme Networks Inc seems to falter, as evidenced by the company's low Growth rank. This suggests that the company's growth rate is slower than its peers, which could limit its potential for future earnings.
Lastly, Extreme Networks Inc predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While Extreme Networks Inc has a strong history in the Hardware industry, its current financial indicators suggest that it may struggle to maintain this performance in the future. Investors should consider these factors when making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
