F5 Networks (FFIV:NAS) Fundamental Valuation Report

Fundamental Valuation Report

F5 Networks(FFIV:NAS)

Technology:Software-Infrastructure

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$168.62 (USD) 21/11/2018

Weighted Valuation
$159.44 (USD)

Overall Rating
Overvalued by 5.4%

Valuation Models Analyst Consensus: $170.50 (USD)
(in order of importance) Adjusted Book Value: $144.60 (USD)
Multiples: $155.92 (USD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation

Company Overview (FFIV:NAS USD)

Price 168.62
Range 167.11 – 170.23
52 week 123.19 – 199.42
Open 168.33
Vol / Avg. 531730/730272
Mkt cap 10.15B
P/E 23.16
Div/yield 0.00/0.00
EPS 7.32
Shares 60.63M
Beta 0.95

Company Description

F5 Networks provides products that govern traffic flows between on-premises applications and external users and services. In addition, the company provides numerous security solutions geared toward its existing user base. The company is a recognized market leader in application delivery controller equipment in the U.S. and around the world. The North American market represents approximately 50% of the company’s revenue, EMEA 23%, and APAC 15%.

Valuation Details

 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 FFIV:NAS

Using a discounted cash flow model we generated an intrinsic value of $203.53 (USD) for FFIV:NAS

Sensitivity Analysis

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

FFIV:NAS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $203.53 1% 5% 1% 5%
WACC (or Ke) 8.61 $247.85 $172.62
Terminal Growth Rate 3.00 $175.90 $243.16
Tax Rate 0.25 $215.60 $191.46
Cash Flow 933,578,651 $194.13 $212.94
Capital Expenditures -47,531,800 $203.08 $203.98
Long Term Debt 0 $203.53 $203.53

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

Comparables Model

Using similar companies and price based ratios we generated a valuation of $428.32 (USD) for FFIV:NAS. We also generated a valuation of $204.00 (USD) using other metrics and comparables.
The comparable companies were Citrix Systems (CTXS:NAS), Fair Isaac (FICO:NYS), New Relic (NEWR:NYS), Nutanix (NTNX:NAS) and Ultimate Software Group (ULTI:NAS).

Company FFIV:NAS End Date Value
Earnings/Share $7.32 (USD)
Book Value/Share $21.02 (USD)
Sales/Share $34.13 (USD)
Cash Flow/Share $12.30 (USD)
EBITDA/Share $10.79 (USD)
Price Based on Comps Adjustment Factor (%)
$0.00 (USD) -44.5
$392.39 (USD) 11.3
$260.20 (USD) 41.7
$548.12 (USD) -18.2
$415.57 (USD) -20.8
FFIV:NAS Ratios Used Average Values CTXS:NAS FICO:NYS NEWR:NYS NTNX:NAS ULTI:NAS
24.08 PE Ratio 137.49 142.32 46.10 0.00 0.00 224.06
8.34 PB Ratio 18.66 20.79 18.94 16.70 22.70 14.19
5.14 PS Ratio 7.62 5.28 6.03 12.91 5.90 8.00
14.25 PCF Ratio 44.57 14.80 27.93 72.38 73.59 34.14
14.37 EV to EBITDA 38.53 17.07 27.04 0.00 0.00 71.48

Multiples

Using a multiples approach we generated a valuation of  $155.92 (USD) for FFIV:NAS

Company FFIV:NAS End Date Value
Earnings/Share $7.32 (USD)
Book Value/Share $21.02 (USD)
Sales/Share $34.13 (USD)
Cash Flow/Share $12.30 (USD)
EBITDA/Share $10.79 (USD)
Price Based on Comps Adjustment Factor
$178.74 (USD) 0
$141.83 (USD) 0
$156.86 (USD) 0
$161.64 (USD) 0
$140.51 (USD) 0
Ratios Ratio Average
PE Ratio 24.42
PB Ratio 6.75
PS Ratio 4.60
PCF Ratio 13.14
EV to EBITDA 13.03

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  FFIV:NAS for the last 10 years was  6.77

We ran the Adjusted Book Value for  FFIV:NAS and generated a book value of  $21.35 (USD)
By multiplying these we get an adjusted valuation of  $144.60 (USD)

Analyst Data

In the Stockcalc database there are 4 analysts that provide a valuation for FFIV:NAS. The 4 analysts have a concensus valuation for FFIV:NAS for 2019 of $170.50 (USD).

FFIV:NAS F5 Networks

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
2 3 1 3.1429 Hold 2018-11-21

Current Price: 168.62 USD

Analyst Consensus
USD Millions 2019 2020 2021
Mean EPS 10.46 11.27 11.47
# EPS Analysts 6 6 2
Mean Revenue 2,245.10 2,325.60 2,479.00
# Revenue Analysts 6 6 1
Mean Target Price 170.50
Mean Cash Flow 12.45 13.50
Mean EBITDA 831.90 850.30
Mean Net Income 628.60 657.00
Mean Debt Outstanding -501.60 -621.20
Mean Tax Rate 22.70 22.00
Mean Growth Rate 9.51
Mean Capital Expenditure 118.90 68.20 74.10

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.

Notice to User


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