Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
-- F5 Networks
) has been reiterated by TheStreet Ratings as a buy with a ratings score of B . The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, impressive record of earnings per share growth and good cash flow from operations. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.
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Highlights from the ratings report include:
- FFIV's revenue growth has slightly outpaced the industry average of 14.0%. Since the same quarter one year prior, revenues rose by 21.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- FFIV has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, FFIV has a quick ratio of 1.60, which demonstrates the ability of the company to cover short-term liquidity needs.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Communications Equipment industry and the overall market, F5 NETWORKS INC's return on equity exceeds that of both the industry average and the S&P 500.
- F5 NETWORKS INC has improved earnings per share by 18.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, F5 NETWORKS INC increased its bottom line by earning $2.97 versus $1.86 in the prior year. This year, the market expects an improvement in earnings ($4.44 versus $2.97).
- Net operating cash flow has increased to $113.40 million or 12.19% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -11.30%.
F5 Networks, Inc. provides application delivery networking technology that optimizes the delivery of network-based applications, and the security, performance, and availability of servers, data storage devices, and other network resources in the Americas, EMEA, Japan, and the Asia Pacific. The company has a P/E ratio of 31.9, equal to the average computer software & services industry P/E ratio and above the S&P 500 P/E ratio of 17.7. F5 has a market cap of $8.64 billion and is part of the
industry. Shares are up 3.1% year to date as of the close of trading on Friday.
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--Written by a member of TheStreet Ratings Staff.
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