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When F5 Networks, Inc. (NASDAQ:FFIV) announced its most recent earnings (31 March 2019), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well F5 Networks has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I've summarized the key takeaways on how I see FFIV has performed.
How Well Did FFIV Perform?
FFIV's trailing twelve-month earnings (from 31 March 2019) of US$503m has jumped 16% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 9.7%, indicating the rate at which FFIV is growing has accelerated. How has it been able to do this? Well, let’s take a look at if it is solely owing to an industry uplift, or if F5 Networks has experienced some company-specific growth.
In terms of returns from investment, F5 Networks has invested its equity funds well leading to a 34% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 16% exceeds the US Communications industry of 5.4%, indicating F5 Networks has used its assets more efficiently. However, its return on capital (ROC), which also accounts for F5 Networks’s debt level, has declined over the past 3 years from 38% to 33%.
What does this mean?
Though F5 Networks's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research F5 Networks to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for FFIV’s future growth? Take a look at our free research report of analyst consensus for FFIV’s outlook.
- Financial Health: Are FFIV’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2019. This may not be consistent with full year annual report figures.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.