Q1 Earnings Preview for F5 Networks (FFIV)

in EARNINGS/INVESTING IDEAS by

F5 Networks, Inc. (NASDAQGS:FFIV) is scheduled to report Q1 earnings results on Monday, January 27, 2020, after markets close for trading. A live conference call and webcast to review the quarter’s results are scheduled for 4:30 p.m. ET.

The company is expected to report earnings of $2.43/share on revenue of $566 million. The consensus earnings per share (EPS) of $2.43/share is based on a poll of 18 analysts and represents a decline of -10.0% over the same quarter last year when the company reported earnings of $2.70/share.

The revenue forecast of $566 million based on a poll of 15 analysts implies a year-over-year (YoY) growth of 4.1%. Last year the company reported $543.8 million in revenue for the quarter.

Expected to report EPS decline of -$0.27/share for Q1, 2019
Metric Expected Prior Year YoY Change
Revenue $566.00 $543.77 4.1%
EPS $2.43 $2.70 -10.0%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.

What are your expectations from F5 Networks for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q4, 2019 $2.55 $2.59 1.6% Beat
Q3, 2019 $2.50 $2.52 0.7% Beat
Q2, 2019 $2.54 $2.57 1.0% Beat
Q1, 2019 $2.54 $2.70 6.3% Beat
Q4, 2018 $2.63 $2.90 10.2% Beat
Q3, 2018 $2.38 $2.44 2.4% Beat
Q2, 2018 $2.26 $2.31 2.2% Beat
Q1, 2018 $2.04 $2.26 10.8% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report.

After the last earnings report for the period ending September 30, 2019, the stock price reacted by increasing by 4.9%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-10-23 $139.10 $145.94 4.9% Increase
2019-07-24 $147.64 $147.69 0.0% Increase
2019-04-24 $163.95 $162.47 -0.9% Decline
2019-01-23 $157.30 $156.09 -0.8% Decline

Fundamentals And Technical Analysis

F5 Networks is currently trading at $135.22/share, down -1.3% for the day. The company is trading at approximately 78.0% of its 52-week high of $173.44/share. The company’s stock price is down -7.3% since the last earnings report and down -0.6% over the previous week.

NASDAQGS:FFIV Stock Price Chart Source: Finbox

The company’s 14 Day Relative Price Index (RSI) of 43.01 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

The current share price implies a price-to-earnings (P/E) multiple of 19.5x and a forward P/E multiple of 13.3x. F5 Networks’ current share price also implies a price-to-book (P/B) multiple of 4.7x. The following table summarizes some other key fundamental ratios:

Data as of January 21, 2020
Metric Value
Last Fiscal Period FY2019.Q4
Period End Date September 30, 2019
Stock Price (Current) $135.22
P/E Ratio 19.5x
P/E Ratio (Fwd) 13.3x
PEG Ratio 1.9
Total Debt to Capital (%) 0.0%
Levered Free Cash Flow $644.3 million
Enterprise Value / EBITDA 12.4x

Source: Finbox

Company Profile: F5 Networks, Inc.

F5 Networks, Inc. is a mid-cap stock with a market capitalization of $8.329 billion and a total enterprise value of $7.356 billion. The company operates in the Information Technology sector and the Communications Equipment industry.

F5 Networks, Inc. provides multi-cloud application services for the availability, security, performance, and availability of network applications, servers, and storage systems.

The company’s primary application delivery technology is the Traffic Management Operating System that enables the company’s products to intercept, inspect, and act on the contents of the traffic. It offers Local Traffic Manager; DNS solution for application security services; BIG-IP management and orchestration software; BIG-IP Virtual Edition and BIG-IP Cloud Edition software; Advanced Firewall Manager, a firewall software; and Application Security Manager and Access Policy Manager software products. The company also provides cloud-based managed services.

In addition, it offers a range of professional services, including consulting, training, installation, maintenance, and other technical support services. The company sells its products to large enterprise businesses, public sector institutions, governments, and service providers through distributors, value-added resellers, managed service providers, and systems integrators in the Americas, Europe, the Middle East, Africa, Japan, and the Asia Pacific region.

F5 Networks, Inc. has partnerships with public cloud providers, such as Amazon Web Services, Microsoft Azure, Google Cloud Platform, and Alibaba Cloud. The company was founded in 1996 and is headquartered in Seattle, Washington.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.