Brocade Communications Systems Inc

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BRCD : NASDAQ : Technology
$9.12 | %
Today's Range: 8.96 - 9.15
Avg. Daily Volume: 9,532,700
07/22/16 - 4:00 PM ET

Financial Analysis


BROCADE COMMUNICATIONS SYS's gross profit margin for the second quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. Sales and net income have dropped, underperforming the average competitor within its industry. BROCADE COMMUNICATIONS SYS is extremely liquid. Currently, the Quick Ratio is 3.08 which clearly shows the ability to cover any short-term cash needs. The company's liquidity has increased from the same period last year.

At the same time, stockholders' equity ("net worth") has remained virtually unchanged only increasing by 2.44% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is very unlikely to face financial difficulties in the near future.

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Income Statement Q2 FY16 Q2 FY15
Net Sales ($mil)523.31546.58
EBITDA ($mil)111.45136.58
EBIT ($mil)88.42115.91
Net Income ($mil)43.0977.04


Balance Sheet Q2 FY16 Q2 FY15
Cash & Equiv. ($mil)1427.641366.81
Total Assets ($mil)3992.973940.62
Total Debt ($mil)802.58788.34
Equity ($mil)2521.142460.92


Profitability Q2 FY16 Q2 FY15
Gross Profit Margin71.1271.71
EBITDA Margin21.2924.98
Operating Margin16.921.21
Sales Turnover0.560.57
Return on Assets7.838.5
Return on Equity12.413.61
Debt Q2 FY16 Q2 FY15
Current Ratio3.283.22
Debt/Capital0.240.24
Interest Expense9.9610.55
Interest Coverage8.8810.98


Share Data Q2 FY16 Q2 FY15
Shares outstanding (mil)399.38417.89
Div / share0.050.04
EPS0.110.18
Book value / share6.315.89
Institutional Own % n/a n/a
Avg Daily Volume9450194.05332732.0

Valuation


BUY. BROCADE COMMUNICATIONS SYS's P/E ratio indicates a significant discount compared to an average of 27.55 for the Communications Equipment industry and a significant discount compared to the S&P 500 average of 25.05. To use another comparison, its price-to-book ratio of 1.43 indicates a discount versus the S&P 500 average of 2.81 and a significant discount versus the industry average of 3.09. The price-to-sales ratio is below the S&P 500 average and is well below the industry average, indicating a discount. Upon assessment of these and other key valuation criteria, BROCADE COMMUNICATIONS SYS proves to trade at a discount to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
BRCD 12.03 Peers 27.55   BRCD 7.94 Peers 12.38

Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations.

BRCD is trading at a significant discount to its peers.

 

Discount. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

BRCD is trading at a significant discount to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
BRCD 8.80 Peers 18.33   BRCD 0.91 Peers 0.62

Discount. A lower price-to-projected earnings ratio than its peers can signify a less expensive stock or lower future growth expectations.

BRCD is trading at a significant discount to its peers.

 

Premium. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

BRCD trades at a significant premium to its peers.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
BRCD 1.43 Peers 3.09   BRCD -2.60 Peers 51.41

Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

BRCD is trading at a significant discount to its peers.

 

Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

However, BRCD is expected to significantly trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
BRCD 1.61 Peers 3.14   BRCD 0.25 Peers 10.39

Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

BRCD is trading at a significant discount to its industry on this measurement.

 

Lower. A sales growth rate that trails the industry implies that a company is losing market share.

BRCD significantly trails its peers on the basis of sales growth

 

 

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