Taking everything into account, CIEN scores 5 out of 10 in our fundamental rating. CIEN was compared to 48 industry peers in the Communications Equipment industry. While CIEN has a great health rating, its profitability is only average at the moment. While showing a medium growth rate, CIEN is valued expensive at the moment.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

CIEN had positive earnings in the past year.
In the past year CIEN had a positive cash flow from operations.
CIEN had positive earnings in each of the past 5 years.
Of the past 5 years CIEN 4 years had a positive operating cash flow.

1.2 Ratios

Looking at the Return On Assets, with a value of 2.10%, CIEN is in the better half of the industry, outperforming 64.58% of the companies in the same industry.
The Return On Equity of CIEN (4.52%) is better than 62.50% of its industry peers.
CIEN's Return On Invested Capital of 5.08% is fine compared to the rest of the industry. CIEN outperforms 68.75% of its industry peers.
The Average Return On Invested Capital over the past 3 years for CIEN is significantly below the industry average of 12.17%.
The last Return On Invested Capital (5.08%) for CIEN is above the 3 year average (4.76%), which is a sign of increasing profitability.

		Industry Rank	Sector Rank
ROA	2.1%
ROE	4.52%
ROIC	5.08%

ROA(3y)2.71%

ROA(5y)4.29%

ROE(3y)5.48%

ROE(5y)7.73%

ROIC(3y)4.76%

ROIC(5y)5.64%

1.3 Margins

CIEN has a Profit Margin of 2.59%. This is in the better half of the industry: CIEN outperforms 62.50% of its industry peers.
CIEN's Profit Margin has declined in the last couple of years.
CIEN's Operating Margin of 6.52% is fine compared to the rest of the industry. CIEN outperforms 70.83% of its industry peers.
CIEN's Operating Margin has declined in the last couple of years.
CIEN's Gross Margin of 42.04% is in line compared to the rest of the industry. CIEN outperforms 52.08% of its industry peers.
In the last couple of years the Gross Margin of CIEN has declined.

		Industry Rank	Sector Rank
OM	6.52%
PM (TTM)	2.59%
GM	42.04%

OM growth 3Y-2.73%

OM growth 5Y-14.83%

PM growth 3Y-14.99%

PM growth 5Y-24.04%

GM growth 3Y-0.72%

GM growth 5Y-2.12%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so CIEN is destroying value.
Compared to 1 year ago, CIEN has less shares outstanding
The number of shares outstanding for CIEN has been reduced compared to 5 years ago.
Compared to 1 year ago, CIEN has an improved debt to assets ratio.

2.2 Solvency

CIEN has an Altman-Z score of 7.54. This indicates that CIEN is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 7.54, CIEN belongs to the top of the industry, outperforming 85.42% of the companies in the same industry.
The Debt to FCF ratio of CIEN is 2.31, which is a good value as it means it would take CIEN, 2.31 years of fcf income to pay off all of its debts.
CIEN has a better Debt to FCF ratio (2.31) than 60.42% of its industry peers.
A Debt/Equity ratio of 0.56 indicates that CIEN is somewhat dependend on debt financing.
CIEN has a Debt to Equity ratio of 0.56. This is in the lower half of the industry: CIEN underperforms 72.92% of its industry peers.
Although CIEN does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.

		Industry Rank	Sector Rank
Debt/Equity	0.56
Debt/FCF	2.31
Altman-Z	7.54

ROIC/WACC0.51

WACC9.87%

2.3 Liquidity

CIEN has a Current Ratio of 2.73. This indicates that CIEN is financially healthy and has no problem in meeting its short term obligations.
CIEN has a Current ratio of 2.73. This is in the better half of the industry: CIEN outperforms 72.92% of its industry peers.
A Quick Ratio of 2.12 indicates that CIEN has no problem at all paying its short term obligations.
CIEN has a better Quick ratio (2.12) than 75.00% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	2.73
Quick Ratio	2.12

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

The Earnings Per Share has grown by an impressive 45.05% over the past year.
The Earnings Per Share has been decreasing by -2.13% on average over the past years.
The Revenue has grown by 18.79% in the past year. This is quite good.
The Revenue has been growing slightly by 6.19% on average over the past years.

EPS 1Y (TTM)45.05%

EPS 3Y11.01%

EPS 5Y-2.13%

EPS Q2Q%68.52%

Revenue 1Y (TTM)18.79%

Revenue growth 3Y9.5%

Revenue growth 5Y6.19%

Sales Q2Q%20.27%

3.2 Future

CIEN is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 48.77% yearly.
The Revenue is expected to grow by 14.43% on average over the next years. This is quite good.

EPS Next Y106.21%

EPS Next 2Y62.18%

EPS Next 3Y48.77%

EPS Next 5YN/A

Revenue Next Year26.29%

Revenue Next 2Y21.07%

Revenue Next 3Y18.51%

Revenue Next 5Y14.43%

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.

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4. Valuation

4.1 Price/Earnings Ratio

With a Price/Earnings ratio of 95.38, CIEN can be considered very expensive at the moment.
Compared to the rest of the industry, the Price/Earnings ratio of CIEN is on the same level as its industry peers.
When comparing the Price/Earnings ratio of CIEN to the average of the S&P500 Index (28.30), we can say CIEN is valued expensively.
Based on the Price/Forward Earnings ratio of 46.25, the valuation of CIEN can be described as expensive.
CIEN's Price/Forward Earnings ratio is in line with the industry average.
Compared to an average S&P500 Price/Forward Earnings ratio of 25.57, CIEN is valued quite expensively.

		Industry Rank	Sector Rank
PE	95.38
Fwd PE	46.25

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of CIEN is on the same level as its industry peers.
CIEN's Price/Free Cash Flow is on the same level as the industry average.

		Industry Rank	Sector Rank
P/FCF	53.39
EV/EBITDA	79.3

4.3 Compensation for Growth

CIEN's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
A more expensive valuation may be justified as CIEN's earnings are expected to grow with 48.77% in the coming years.