F5 Networks (FFIV) Stock Gains After CEO Replaced

NEW YORK (TheStreet) -- F5 Networks  (FFIV) stock is up 3.23% to $99.42 in mid-afternoon trading on Tuesday after the company replaced CEO Manuel Rivelo for alleged personal conduct reasons.

The company replaced Rivelo with John McAdam, who has served as both chairman and CEO of F5 Networks, on Monday. F5 Networks' board will immediately begin searching for a permanent CEO.

The company may also look for a buyer, Pacific Crest said in an analyst note on Tuesday.

"Management disruption increases the potential for F5 to seek a strategic buyer in 2016 concurrent with a search for a new CEO," Pacific Crest said. 

F5 Networks, which provides application delivery services, said Rivelo's departure is not related to the company's finances or operating performance. 

Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate F5 NETWORKS INC as a Buy with a ratings score of B. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and good cash flow from operations. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 6.0%. Since the same quarter one year prior, revenues slightly increased by 7.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving 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. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.40, which illustrates the ability to avoid short-term cash problems.
  • 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 significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for F5 NETWORKS INC is currently very high, coming in at 85.63%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 19.35% is above that of the industry average.
  • Net operating cash flow has slightly increased to $183.34 million or 7.93% when compared to the same quarter last year. In addition, F5 NETWORKS INC has also modestly surpassed the industry average cash flow growth rate of 7.46%.
  • You can view the full analysis from the report here: FFIV

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