FFIV is Cheap Again

F5 Networks (FFIV) is cheap again. But unlike last year, FFIV isn’t a great buy right now. Estimates are falling.

One Year Chart

Here’s FFIV’s one-year chart as of this morning. Profits grew 18% last quarter, that’s down from 30% a quarter earlier. I can live with 18% growth. What I don’t like is Estimates are showing 11% and 17% growth ahead. This company only met estimates last quarter, so I don’t know if FFIV can beat the street, thus we might be seeing 15% growth or so for the next 2-4 quarters.

Also, quarterly estimates just decreased. NxtQtr by 8 cents, 2QtrsOut by 6 cents. 2012’s estimate just came down from $4.53 to 4.44. Estimates are falling, therefore I’m taking the Fair Value P/E down too.

Fair Value

I think FFIV is worth somewhere between 20 and 25 times earnings. The stock is worth what it’s selling for.

Sharek’s Take

I bought FFIV stock for clients at $85 last year (August 5, 2011) and sold it for $133 this year (March 28, 2012) because the stock was richly valued and I thought I would get in if it came down again. Now the stock is down to $98 but with growth slowing and estimates falling, FFIV isn’t worth buying until it falls to $80.