Ciena (CIEN:NYS) Fundamental Valuation Report


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Ciena $21.38 (USD) Close Price as of 20/12/2017

Based on the analysis conducted in this report, Ciena, (CIEN:NYS) is found to be  Undervalued.

Company Ciena
Symbol:Exchange CIEN:NYS
Industry Technology:Communication Equipment
Close Price/Date $21.38 (USD) 20/12/2017
Weighted Average Valuation $22.76 (USD)
Summary CIEN:NYS is found to be  Undervalued by 6.5% using the 2 valuation models shown below.
Valuation Models Used Analyst Consensus: $23.50 (USD)
(in order of importance) Adjusted Book Value: $21.65 (USD)
Valuation Methods Analysis This company is:
Cash Flow Basis: Overvalued on a Cash Flow Valuation basis
Comparable Company Basis: Undervalued on a Comparable Valuation basis
Asset Basis: Fairly valued on an Asset Valuation basis

Valuation Details

Ciena Valuations

Summary chart

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for CIEN:NYS

Using a discounted cash flow model we generated an intrinsic value of $10.41 (USD) for CIEN:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

CIEN:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $10.41 1% 5% 1% 5%
WACC (or Ke) 10.21 $13.80 $7.84
Terminal Growth Rate 3.00 $8.11 $13.45
Tax Rate 0.16 $12.05 $8.76
Cash Flow 413,133,000 $8.88 $11.94
Capital Expenditures -61,884,400 $10.21 $10.61
Long Term Debt 1,483,592,000 $10.93 $9.89

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $37.17 (USD) for CIEN:NYS. We also generated a valuation of $19.40 (USD) using other metrics and comparables.
The comparable companies were Adtran (ADTN:NAS), Infinera (INFN:NAS), Lumentum Holdings (LITE:NAS), Loral Space (LORL:NAS) and EchoStar (SATS:NAS)

Company CIEN:NYS End Date Value
Earnings/Share $7.53 (USD)
Book Value/Share $6.60 (USD)
Sales/Share $16.34 (USD)
Cash Flow/Share $1.37 (USD)
EBITDA/Share $0.00 (USD)
Price Based on Comps Adjustment Factor (%)
$0.00 (USD) 89.0
$20.59 (USD) 0.0
$33.18 (USD) -23.5
$43.03 (USD) 52.3
$0.00 (USD) 0.0
CIEN:NYS Ratios Used Average Values ADTN:NAS INFN:NAS LITE:NAS LORL:NAS SATS:NAS
22.74 PE Ratio 27.48 25.74 0.00 0.00 16.77 39.92
3.24 PB Ratio 3.12 2.16 1.38 5.21 5.38 1.46
1.31 PS Ratio 2.03 1.57 1.37 3.35 0.00 1.83
15.57 PCF Ratio 31.34 30.44 0.00 56.65 0.00 6.93
9.50 EV to EBITDA 50.15 13.88 0.00 130.22 0.00 6.36

Multiples

Using a multiples approach we generated a valuation of  $144.91 (USD) for CIEN:NYS

Company CIEN:NYS End Date Value
Earnings/Share $7.53 (USD)
Book Value/Share $6.60 (USD)
Sales/Share $16.34 (USD)
Cash Flow/Share $1.37 (USD)
EBITDA/Share $1.68 (USD)
Price Based on Comps Adjustment Factor
$637.59 (USD) 0
$26.67 (USD) 0
$18.12 (USD) 0
$17.26 (USD) 0
$24.93 (USD) 0
Ratios Ratio Average
PE Ratio 84.67
PB Ratio 4.04
PS Ratio 1.11
PCF Ratio 12.57
EV to EBITDA 14.86

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  CIEN:NYS for the last 10 years was  3.95

We ran the Adjusted Book Value for  CIEN:NYS and generated a book value of  $5.48 (USD)
By multiplying these we get an adjusted valuation of  $21.65 (USD)

Analyst Data

In the Stockcalc database there are 2 analysts that provide a valuation for CIEN:NYS. The 2 analysts have a concensus valuation for CIEN:NYS for 2018 of $23.50 (USD).

CIEN:NYS Ciena

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
2 2 0 4.0000 Outperform 2017-12-19

Current Price: not available

Analyst Consensus
USD Millions 2017 2018 2019
Mean EPS 3.29 1.45 1.70
# EPS Analysts 4 4 4
Mean Revenue 2,798.50 2,934.80 3,084.00
# Revenue Analysts 3 3 3
Mean Target Price 23.50
Mean Cash Flow 2.14 2.15 2.17
Mean EBITDA 379.40 372.70 401.10
Mean Net Income 226.90 226.50 263.30
Mean Debt Outstanding 157.80 107.50 74.90
Mean Tax Rate
Mean Growth Rate 12.96
Mean Capital Expenditure 95.90 81.70 76.90

Company Overview (CIEN:NYS USD)

Price 21.62
Range 21.15 – 21.71
52 week 19.40 – 27.98
Open 21.17
Vol / Avg. 0.00/3.54M
Mkt cap 3.08B
P/E 2.70
Div/yield     –
EPS 7.99
Shares 143.04M
Beta 1.66
Inst. own 110%
Summary chart

Detailed Company Description

Ciena Corp provides telecommunication equipment. Its products include equipment that supports voice, video and data traffic on communications networks.

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.
The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).
The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.
We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.
Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.
With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.
If we have Analyst coverage for the company we use the consensus target price here.

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