Brocade Communications Systems Inc

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BRCD : NASDAQ : Technology
$12.38 | %
Today's Range: 12.36 - 12.43
Avg. Daily Volume: 9111800.0
12/09/16 - 4:00 PM ET

Financial Analysis


BROCADE COMMUNICATIONS SYS's gross profit margin for the fourth quarter of its fiscal year 2016 has decreased when compared to the same period a year ago. Even though sales increased, the net income has decreased. BROCADE COMMUNICATIONS SYS is extremely liquid. Currently, the Quick Ratio is 2.22 which clearly shows the ability to cover any short-term cash needs. The company's liquidity has decreased from the same period last year, indicating deteriorating cash flow.

During the same period, stockholders' equity ("net worth") has remained unchanged 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 Q4 FY16 Q4 FY15
Net Sales ($mil)657.3588.83
EBITDA ($mil)0.0142.09
EBIT ($mil)91.13119.99
Net Income ($mil)66.5984.39


Balance Sheet Q4 FY16 Q4 FY15
Cash & Equiv. ($mil)1257.081440.88
Total Assets ($mil)4937.354038.18
Total Debt ($mil)1578.76796.1
Equity ($mil)2540.462533.54


Profitability Q4 FY16 Q4 FY15
Gross Profit Margin62.6770.51
EBITDA Margin0.024.13
Operating Margin13.8620.38
Sales Turnover0.480.56
Return on Assets4.338.42
Return on Equity8.4113.43
Debt Q4 FY16 Q4 FY15
Current Ratio2.413.29
Debt/Capital0.380.24
Interest Expense16.059.82
Interest Coverage5.6812.21


Share Data Q4 FY16 Q4 FY15
Shares outstanding (mil)401.75413.92
Div / share0.060.05
EPS0.160.2
Book value / share6.326.12
Institutional Own % n/a n/a
Avg Daily Volume9244781.06881204.0

Valuation


BUY. BROCADE COMMUNICATIONS SYS's P/E ratio indicates a discount compared to an average of 30.97 for the Communications Equipment industry and a value on par with the S&P 500 average of 25.22. For additional comparison, its price-to-book ratio of 1.95 indicates a discount versus the S&P 500 average of 2.79 and a discount versus the industry average of 3.15. The price-to-sales ratio is above the S&P 500 average, but well below the industry average. 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 23.77 Peers 30.97   BRCD 12.04 Peers 13.81

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

BRCD is trading at a 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 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 NA Peers 19.78   BRCD 0.24 Peers 1.01

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.

 

Discount. 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 discount to its peers.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
BRCD 1.95 Peers 3.15   BRCD -34.18 Peers 76.74

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 2.12 Peers 2.88   BRCD 3.62 Peers 12.11

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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