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F5 Networks Inc (NASDAQ:FFIV): Poised For Long Term Success?

After F5 Networks Inc’s (NASDAQ:FFIV) earnings announcement on 30 September 2018, it seems that analyst forecasts are fairly in-line with its track record, as upcoming earnings growth is expected to be 8.6% next year, similar to the range of average earnings growth for the past five years of 9.4% per year. By 2019, we can expect F5 Networks’s bottom line to reach US$493m, a jump from the current trailing-twelve-month US$454m. Below is a brief commentary around F5 Networks’s earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here.

View our latest analysis for F5 Networks

What can we expect from F5 Networks in the longer term?

Longer term expectations from the 21 analysts covering FFIV’s stock is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To get an idea of the overall earnings growth trend for FFIV, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

NasdaqGS:FFIV Future Profit December 1st 18

From the current net income level of US$454m and the final forecast of US$515m by 2021, the annual rate of growth for FFIV’s earnings is 5.2%. This leads to an EPS of $8.6 in the final year of projections relative to the current EPS of $7.41. In 2021, FFIV’s profit margin will have expanded from 21% to 22%.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For F5 Networks, I’ve put together three key factors you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is F5 Networks worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether F5 Networks is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of F5 Networks? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.