NTCT gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 48 industry peers in the Communications Equipment industry. While NTCT has a great profitability rating, there are some minor concerns on its financial health. NTCT may be a bit undervalued, certainly considering the very reasonable score on growth This makes NTCT very considerable for value investing!

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

NTCT had positive earnings in the past year.
NTCT had a positive operating cash flow in the past year.
In multiple years NTCT reported negative net income over the last 5 years.
NTCT had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

With a decent Return On Assets value of 4.12%, NTCT is doing good in the industry, outperforming 72.92% of the companies in the same industry.
NTCT's Return On Equity of 5.69% is fine compared to the rest of the industry. NTCT outperforms 68.75% of its industry peers.
Looking at the Return On Invested Capital, with a value of 4.83%, NTCT is in the better half of the industry, outperforming 66.67% of the companies in the same industry.
NTCT had an Average Return On Invested Capital over the past 3 years of 2.83%. This is significantly below the industry average of 12.15%.
The 3 year average ROIC (2.83%) for NTCT is below the current ROIC(4.83%), indicating increased profibility in the last year.

		Industry Rank	Sector Rank
ROA	4.12%
ROE	5.69%
ROIC	4.83%

ROA(3y)-6.79%

ROA(5y)-3.72%

ROE(3y)-9.46%

ROE(5y)-5.14%

ROIC(3y)2.83%

ROIC(5y)2.2%

1.3 Margins

Looking at the Profit Margin, with a value of 10.38%, NTCT belongs to the top of the industry, outperforming 83.33% of the companies in the same industry.
NTCT has a Operating Margin of 12.74%. This is in the better half of the industry: NTCT outperforms 77.08% of its industry peers.
In the last couple of years the Operating Margin of NTCT has grown nicely.
NTCT's Gross Margin of 79.21% is amongst the best of the industry. NTCT outperforms 95.83% of its industry peers.
NTCT's Gross Margin has been stable in the last couple of years.

		Industry Rank	Sector Rank
OM	12.74%
PM (TTM)	10.38%
GM	79.21%

OM growth 3Y19.56%

OM growth 5Y33.65%

PM growth 3YN/A

PM growth 5YN/A

GM growth 3Y1.45%

GM growth 5Y1.45%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

NTCT has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
NTCT has more shares outstanding than it did 1 year ago.
The number of shares outstanding for NTCT remains at a similar level compared to 5 years ago.
NTCT has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.

2.2 Solvency

An Altman-Z score of 2.73 indicates that NTCT is not a great score, but indicates only limited risk for bankruptcy at the moment.
NTCT's Altman-Z score of 2.73 is fine compared to the rest of the industry. NTCT outperforms 62.50% of its industry peers.
There is no outstanding debt for NTCT. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.

		Industry Rank	Sector Rank
Debt/Equity	0
Debt/FCF	0
Altman-Z	2.73

ROIC/WACC0.5

WACC9.59%

2.3 Liquidity

A Current Ratio of 1.88 indicates that NTCT should not have too much problems paying its short term obligations.
NTCT has a Current ratio (1.88) which is in line with its industry peers.
A Quick Ratio of 1.84 indicates that NTCT should not have too much problems paying its short term obligations.
The Quick ratio of NTCT (1.84) is better than 68.75% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	1.88
Quick Ratio	1.84

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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 nice 19.21% over the past year.
The Earnings Per Share has been growing slightly by 6.94% on average over the past years.
Looking at the last year, NTCT shows a quite strong growth in Revenue. The Revenue has grown by 9.60% in the last year.
The Revenue has been decreasing by -1.60% on average over the past years.

EPS 1Y (TTM)19.21%

EPS 3Y6.11%

EPS 5Y6.94%

EPS Q2Q%31.91%

Revenue 1Y (TTM)9.6%

Revenue growth 3Y-1.3%

Revenue growth 5Y-1.6%

Sales Q2Q%14.6%

3.2 Future

NTCT is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 6.63% yearly.
The Revenue is expected to grow by 3.53% on average over the next years.

EPS Next Y10.92%

EPS Next 2Y7.99%

EPS Next 3Y6.63%

EPS Next 5YN/A

Revenue Next Year4.81%

Revenue Next 2Y3.71%

Revenue Next 3Y3.53%

Revenue Next 5YN/A

3.3 Evolution

The EPS growth rate is stable: in the next years the growth will be about the same 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

NTCT is valuated reasonably with a Price/Earnings ratio of 11.27.
Based on the Price/Earnings ratio, NTCT is valued cheaply inside the industry as 91.67% of the companies are valued more expensively.
Compared to an average S&P500 Price/Earnings ratio of 27.21, NTCT is valued rather cheaply.
The Price/Forward Earnings ratio is 10.59, which indicates a very decent valuation of NTCT.
Based on the Price/Forward Earnings ratio, NTCT is valued cheaply inside the industry as 95.83% of the companies are valued more expensively.
NTCT's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 24.26.

		Industry Rank	Sector Rank
PE	11.27
Fwd PE	10.59

4.2 Price Multiples

NTCT's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. NTCT is cheaper than 81.25% of the companies in the same industry.
NTCT's Price/Free Cash Flow ratio is rather cheap when compared to the industry. NTCT is cheaper than 95.83% of the companies in the same industry.

		Industry Rank	Sector Rank
P/FCF	7.7
EV/EBITDA	8.57

4.3 Compensation for Growth

The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
The decent profitability rating of NTCT may justify a higher PE ratio.