| Stock (Symbol) | Stock Price | |
F5 Networks (FFIV) |
$105 |
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| Data is as of | Expected to Report | Sector |
November 3, 2011 |
Jan 18 |
Technology |
| Sharek’s Take | ||
 I like the action F5 Networks (FFIV) is showing. I purchased FFIV on 8/5 for the Growth Portfolio at $84 and now the stock is $105. Yesterday I felt this stock was ready to make a run higher, but when I updated the spreadsheet, I found FFIV was selling around its Fair Value. |
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| One-Year Chart | ||
 The one-year chart shows the stock bottoming around $75 during wicked stock market conditions caused by the European financial crisis. Last week the stock popped after reporting earnings, but I am not as impressed as other investors.
Notice quarterly profit growth (the four figures on the bottom left) is slowing each quarter — from 69% to 34%. Now 15% growth is expected the next two quarters. FFIV’s P/E of 24 is in black, last quarter the P/E was 20 in green (with 25% growth expected in the coming quarter. |
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| Earnings Table | ||
 Profit growth clocked in at 34% last quarter. Revenue growth was 24% last quarter, 26% 2QtrsAgo. FFIV clocks in with record profits each quarter: 50 cents, 52 cents, 56 cents, 66 cents, 79 cents, 88 cents, 88 cents, 97 cents and $1.06 last quarter.
FFIV beat the street by 7 cents. Since FFIV has a history of record profits each quarter, I think the company can make $1.07 next quarter, that would mean beating the street by 6 cents and 22% profit growth.Annual Profit Estimatesstayed consistent from last quarter.Profit growth is expected to come in around 15% in each of the next four quarters. I think FFIV will have profit growth of around 22-25% the next four quarters. |
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| Fair Value | ||
 Considering the expected growth ahead, I’m taking my Fair Value P/E down to 25, from 30 LastQtr and 35 2QtrsAgo. FFIV is selling around its 2012 Fair Value right now. |
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| Ten-Year Chart | ||
 FFIV got a little ahead of itself in 2010. The stock was one of the market’s best that year. Looking at the tail end of this chart, it seems the stock needs a base here.
Long term, this has been a 25% grower. I think that can continue. So even though the stock has little upside here, its a solid long-term buy-and-hold name. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
13 of 21 |
FFIV is a good stock. The future for cloud computing is bright for the next three-to-five years, so I recommend investors hold the stock. The negative is the stock is selling around where it should be, and doesn’t have the upside it did last quarter.
FFIV is the 13th best stock in the 21 stock Growth Portfolio Power Rankings. I went into this report thinking I would add this stock to the Aggressive Growth Portfolio but now I think not. |
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Aggressive Growth Portfolio
N/A |
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