We assign a fundamental rating of 4 out of 10 to VIAV. VIAV was compared to 48 industry peers in the Communications Equipment industry. VIAV has a medium profitability rating, but doesn't score so well on its financial health evaluation. VIAV has a decent growth rate and is not valued too expensively.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

VIAV had positive earnings in the past year.
VIAV had a positive operating cash flow in the past year.
Of the past 5 years VIAV 4 years were profitable.
VIAV had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

Looking at the Return On Assets, with a value of 0.73%, VIAV is in line with its industry, outperforming 57.14% of the companies in the same industry.
Looking at the Return On Equity, with a value of 2.10%, VIAV is in the better half of the industry, outperforming 61.22% of the companies in the same industry.
VIAV has a Return On Invested Capital (2.69%) which is in line with its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for VIAV is significantly below the industry average of 12.15%.

		Industry Rank	Sector Rank
ROA	0.73%
ROE	2.1%
ROIC	2.69%

ROA(3y)0.55%

ROA(5y)1.19%

ROE(3y)1.46%

ROE(5y)3.1%

ROIC(3y)3.35%

ROIC(5y)5.84%

1.3 Margins

VIAV has a Profit Margin (1.33%) which is in line with its industry peers.
In the last couple of years the Profit Margin of VIAV has declined.
With a Operating Margin value of 4.72%, VIAV perfoms like the industry average, outperforming 59.18% of the companies in the same industry.
VIAV's Operating Margin has declined in the last couple of years.
With a decent Gross Margin value of 57.11%, VIAV is doing good in the industry, outperforming 77.55% of the companies in the same industry.
In the last couple of years the Gross Margin of VIAV has remained more or less at the same level.

		Industry Rank	Sector Rank
OM	4.72%
PM (TTM)	1.33%
GM	57.11%

OM growth 3Y-27.88%

OM growth 5Y-12.89%

PM growth 3Y38.83%

PM growth 5Y-5.74%

GM growth 3Y-1.45%

GM growth 5Y-0.44%

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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 VIAV is destroying value.
The number of shares outstanding for VIAV has been increased compared to 1 year ago.
VIAV has less shares outstanding than it did 5 years ago.
VIAV has a better debt/assets ratio than last year.

2.2 Solvency

Based on the Altman-Z score of -44.08, we must say that VIAV is in the distress zone and has some risk of bankruptcy.
The Altman-Z score of VIAV (-44.08) is worse than 85.71% of its industry peers.
VIAV has a debt to FCF ratio of 10.31. This is a negative value and a sign of low solvency as VIAV would need 10.31 years to pay back of all of its debts.
VIAV has a Debt to FCF ratio of 10.31. This is comparable to the rest of the industry: VIAV outperforms 44.90% of its industry peers.
VIAV has a Debt/Equity ratio of 0.91. This is a neutral value indicating VIAV is somewhat dependend on debt financing.
VIAV has a worse Debt to Equity ratio (0.91) than 79.59% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	0.91
Debt/FCF	10.31
Altman-Z	-44.08

ROIC/WACC0.29

WACC9.2%

2.3 Liquidity

VIAV has a Current Ratio of 1.99. This is a normal value and indicates that VIAV is financially healthy and should not expect problems in meeting its short term obligations.
The Current ratio of VIAV (1.99) is comparable to the rest of the industry.
A Quick Ratio of 1.74 indicates that VIAV should not have too much problems paying its short term obligations.
VIAV has a Quick ratio of 1.74. This is comparable to the rest of the industry: VIAV outperforms 59.18% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	1.99
Quick Ratio	1.74

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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 80.65% over the past year.
The Earnings Per Share has been decreasing by -8.43% on average over the past years.
Looking at the last year, VIAV shows a quite strong growth in Revenue. The Revenue has grown by 15.60% in the last year.
Measured over the past years, VIAV shows a decrease in Revenue. The Revenue has been decreasing by -0.93% on average per year.

EPS 1Y (TTM)80.65%

EPS 3Y-20.63%

EPS 5Y-8.43%

EPS Q2Q%150%

Revenue 1Y (TTM)15.6%

Revenue growth 3Y-5.68%

Revenue growth 5Y-0.93%

Sales Q2Q%25.57%

3.2 Future

VIAV is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 37.20% yearly.
VIAV is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 15.75% yearly.

EPS Next Y45.46%

EPS Next 2Y34.27%

EPS Next 3Y37.2%

EPS Next 5YN/A

Revenue Next Year28.45%

Revenue Next 2Y18.17%

Revenue Next 3Y15.75%

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 accelerating.
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

With a Price/Earnings ratio of 33.55, VIAV can be considered very expensive at the moment.
Compared to the rest of the industry, the Price/Earnings ratio of VIAV indicates a somewhat cheap valuation: VIAV is cheaper than 63.27% of the companies listed in the same industry.
The average S&P500 Price/Earnings ratio is at 27.21. VIAV is valued slightly more expensive when compared to this.
The Price/Forward Earnings ratio is 22.18, which indicates a rather expensive current valuation of VIAV.
VIAV's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. VIAV is cheaper than 63.27% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of VIAV to the average of the S&P500 Index (25.98), we can say VIAV is valued inline with the index average.

		Industry Rank	Sector Rank
PE	33.55
Fwd PE	22.18

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of VIAV is on the same level as its industry peers.
61.22% of the companies in the same industry are cheaper than VIAV, based on the Price/Free Cash Flow ratio.

		Industry Rank	Sector Rank
P/FCF	53.56
EV/EBITDA	36.87

4.3 Compensation for Growth

The 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 VIAV's earnings are expected to grow with 37.20% in the coming years.