In September 2018, F5 Networks Inc (NASDAQ:FFIV) announced its latest earnings update, which indicated that the business gained from a slight tailwind, leading to a single-digit earnings growth of 7.8%. Below, I’ve laid out key numbers on how market analysts perceive F5 Networks’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Analysts’ expectations for this coming year seems rather subdued, with earnings expanding by a single digit 8.6%. The growth outlook in the following year seems much more positive with rates reaching double digit 14% compared to today’s earnings, and finally hitting US$515m by 2021.
Even though it’s helpful to understand the rate of growth each year relative to today’s level, it may be more insightful analyzing the rate at which the business is moving on average every year. The pro of this method is that we can get a bigger picture of the direction of F5 Networks’s earnings trajectory over the long run, irrespective of near term fluctuations, fluctuate up and down. To compute this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 5.2%. This means that, we can expect F5 Networks will grow its earnings by 5.2% every year for the next few years.
For F5 Networks, I’ve put together three pertinent factors you should further research:
- 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.
- Valuation: What is FFIV 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 FFIV is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of FFIV? 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 firstname.lastname@example.org.