Taking everything into account, NTCT scores 6 out of 10 in our fundamental rating. NTCT was compared to 48 industry peers in the Communications Equipment industry. While NTCT belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. NTCT may be a bit undervalued, certainly considering the very reasonable score on growth These ratings could make NTCT a good candidate 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.
In the past 5 years NTCT always reported a positive cash flow from operatings.

1.2 Ratios

The Return On Assets of NTCT (4.12%) is better than 72.92% of its industry peers.
NTCT has a better Return On Equity (5.69%) than 68.75% of its industry peers.
NTCT has a Return On Invested Capital of 4.83%. This is in the better half of the industry: NTCT outperforms 66.67% of its industry peers.
The Average Return On Invested Capital over the past 3 years for NTCT is significantly below the industry average of 12.17%.
The last Return On Invested Capital (4.83%) for NTCT is above the 3 year average (2.83%), which is a sign of increasing profitability.

		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

NTCT has a better Profit Margin (10.38%) than 81.25% of its industry peers.
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.
The Gross Margin of NTCT (79.21%) is better than 95.83% of its industry peers.
In the last couple of years the Gross Margin of NTCT has remained more or less at the same level.

		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.
NTCT has about the same amout of shares outstanding than it did 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

NTCT has an Altman-Z score of 2.73. This is not the best score and indicates that NTCT is in the grey zone with still only limited risk for bankruptcy at the moment.
With a decent Altman-Z score value of 2.73, NTCT is doing good in the industry, outperforming 60.42% of the companies in the same industry.
NTCT has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.

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

ROIC/WACC0.49

WACC9.86%

2.3 Liquidity

A Current Ratio of 1.88 indicates that NTCT should not have too much problems paying its short term obligations.
The Current ratio of NTCT (1.88) is comparable to the rest of the industry.
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.
NTCT shows a decrease in Revenue. Measured over the last years, the Revenue has been decreasing by -1.60% yearly.

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

Based on estimates for the next years, NTCT will show a small growth in Earnings Per Share. The EPS will grow by 6.63% on average per year.
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

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
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 11.49, the valuation of NTCT can be described as very reasonable.
NTCT's Price/Earnings ratio is rather cheap when compared to the industry. NTCT is cheaper than 91.67% of the companies in the same industry.
NTCT's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 28.32.
Based on the Price/Forward Earnings ratio of 10.79, the valuation of NTCT can be described as reasonable.
Compared to the rest of the industry, the Price/Forward Earnings ratio of NTCT indicates a rather cheap valuation: NTCT is cheaper than 95.83% of the companies listed in the same industry.
When comparing the Price/Forward Earnings ratio of NTCT to the average of the S&P500 Index (25.57), we can say NTCT is valued rather cheaply.

		Industry Rank	Sector Rank
PE	11.49
Fwd PE	10.79

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, NTCT is valued cheaply inside the industry as 81.25% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, NTCT is valued cheaper than 95.83% of the companies in the same industry.

		Industry Rank	Sector Rank
P/FCF	7.85
EV/EBITDA	8.57

4.3 Compensation for Growth

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