CIEN gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 48 industry peers in the Communications Equipment industry. While CIEN has a great health rating, its profitability is only average at the moment. CIEN is valied quite expensively at the moment, while it does show a decent growth rate.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year CIEN was profitable.
In the past year CIEN had a positive cash flow from operations.
In the past 5 years CIEN has always been profitable.
CIEN had a positive operating cash flow in 4 of the past 5 years.

1.2 Ratios

CIEN has a better Return On Assets (2.10%) than 64.58% of its industry peers.
With a decent Return On Equity value of 4.52%, CIEN is doing good in the industry, outperforming 62.50% of the companies in the same industry.
CIEN has a better Return On Invested Capital (5.08%) than 68.75% of its industry peers.
CIEN had an Average Return On Invested Capital over the past 3 years of 4.76%. This is significantly below the industry average of 12.15%.
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

With a decent Profit Margin value of 2.59%, CIEN is doing good in the industry, outperforming 62.50% of the companies in the same industry.
CIEN's Profit Margin has declined in the last couple of years.
CIEN has a Operating Margin of 6.52%. This is in the better half of the industry: CIEN outperforms 70.83% of its industry peers.
In the last couple of years the Operating Margin of CIEN has declined.
CIEN has a Gross Margin (42.04%) which is in line with 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

CIEN has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
The number of shares outstanding for CIEN has been reduced compared to 1 year ago.
CIEN has less shares outstanding than it did 5 years ago.
CIEN has a better debt/assets ratio than last year.

2.2 Solvency

An Altman-Z score of 6.88 indicates that CIEN is not in any danger for bankruptcy at the moment.
CIEN's Altman-Z score of 6.88 is amongst the best of the industry. CIEN outperforms 87.50% of its industry peers.
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.
Looking at the Debt to FCF ratio, with a value of 2.31, CIEN is in the better half of the industry, outperforming 60.42% of the companies in the same industry.
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	6.88

ROIC/WACC0.52

WACC9.82%

2.3 Liquidity

A Current Ratio of 2.73 indicates that CIEN has no problem at all paying its short term obligations.
CIEN's Current ratio of 2.73 is fine compared to the rest 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.
The Quick ratio of CIEN (2.12) is better 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

CIEN shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 45.05%, which is quite impressive.
The Earnings Per Share has been decreasing by -2.13% on average over the past years.
CIEN shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 18.79%.
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

Based on estimates for the next years, CIEN will show a very strong growth in Earnings Per Share. The EPS will grow by 48.77% on average per year.
Based on estimates for the next years, CIEN will show a quite strong growth in Revenue. The Revenue will grow by 14.43% on average per year.

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

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

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4. Valuation

4.1 Price/Earnings Ratio

CIEN is valuated quite expensively with a Price/Earnings ratio of 87.97.
CIEN's Price/Earnings is on the same level as the industry average.
CIEN is valuated expensively when we compare the Price/Earnings ratio to 27.21, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 42.66, which means the current valuation is very expensive for CIEN.
The rest of the industry has a similar Price/Forward Earnings ratio as CIEN.
The average S&P500 Price/Forward Earnings ratio is at 25.98. CIEN is valued rather expensively when compared to this.

		Industry Rank	Sector Rank
PE	87.97
Fwd PE	42.66

4.2 Price Multiples

The rest of the industry has a similar Enterprise Value to EBITDA ratio as CIEN.
CIEN's Price/Free Cash Flow ratio is in line with the industry average.

		Industry Rank	Sector Rank
P/FCF	49.24
EV/EBITDA	71.67

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.
CIEN's earnings are expected to grow with 48.77% in the coming years. This may justify a more expensive valuation.