Ciena Corp (NYSE: CIEN)

Sector: Technology Industry: Communication Equipment CIK: 0000936395
Market Cap 33.16 Bn
P/B 12.15
P/E 268.82
P/S 6.95
ROIC (Qtr) 31.01
Div Yield % 0.00
Rev 1y % (Qtr) 20.27
Total Debt (Qtr) 1.58 Bn
Debt/Equity (Qtr) 0.58

About

Ciena Corporation, commonly referred to as CIEN, is a prominent player in the telecommunications industry, offering solutions for next-generation networks. The company's primary business activities revolve around the provision of network platform, software, and services, enabling network operators to deploy and manage high-speed networks. Ciena's revenue generation is primarily through the sale of its networking platforms, platform software, and services. The company's principal products are housed under its Optical Networking portfolio, which...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 806.09M provides robust 0.51x coverage of total debt 1.58B, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 1.09B provide 42.76x coverage of short-term debt 25.54M, demonstrating strong liquidity position and minimal refinancing risk.
  • Robust free cash flow of 665.29M exceeds capital expenditure of 140.80M by 4.73x, indicating strong organic growth funding capability.
  • Strong tangible asset base of 5.12B provides 3.24x coverage of total debt 1.58B, indicating robust asset backing and low credit risk.
  • Tangible assets of 5.12B provide exceptional 16.85x coverage of deferred revenue 303.79M, showing strong service capability backing.

Bear case

  • Operating cash flow of 806.09M barely covers its investment activities of (241.50M), with a coverage ratio of -3.34, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (241.50M) provide weak support for R&D spending of 848.33M, which is -0.28x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 1.09B provide limited coverage of acquisition spending of (231.10M), which is -4.73x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • The company's operating cash flow of 806.09M shows concerning coverage of stock compensation expenses of 184.53M, with a 4.37 ratio indicating potential earnings quality issues.
  • Operating earnings of 245.69M show weak coverage of depreciation charges of 140.34M, with a 1.75 ratio indicating high capital intensity and potential reinvestment needs.

Peer comparison

Companies in the Communication Equipment
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 CSCO Cisco Systems, Inc. 306.02 Bn 29.63 5.30 28.09 Bn
2 MSI Motorola Solutions, Inc. 63.92 Bn 30.21 5.65 9.81 Bn
3 HPE Hewlett Packard Enterprise Co 35.43 Bn -600.50 1.03 22.37 Bn
4 UI Ubiquiti Inc. 33.47 Bn 42.27 12.14 0.17 Bn
5 CIEN Ciena Corp 33.16 Bn 268.82 6.95 1.58 Bn
6 LITE Lumentum Holdings Inc. 25.28 Bn 224.75 13.73 3.28 Bn
7 ASTS AST SpaceMobile, Inc. 19.88 Bn -65.43 1,072.82 0.72 Bn
8 ZBRA Zebra Technologies Corp 12.46 Bn 24.33 2.37 2.32 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 5.74 2.22
EV to Cash from Ops. EV/CFO 41.79 10.78
EV to Debt EV to Debt 21.29 25.00
EV to EBIT EV/EBIT 137.11 32.18
EV to EBITDA EV/EBITDA 99.70 10.60
EV to Free Cash Flow [EV/FCF] EV/FCF 50.63 -3.32
EV to Market Cap EV to Market Cap 1.02 1.17
EV to Revenue EV/Rev 7.06 27.87
Price to Book Value [P/B] P/B 12.15 5.35
Price to Earnings [P/E] P/E 268.82 2.67
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 0.91
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 -25.01
Dividend per Basic Share Div per Share (Qtr) 0.00 0.22
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 4.46
Interest Coverage Int. cover (Qtr) 2.75 -12.93
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -3.04 -73.93
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 16.80 463.06
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 1.39
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 27.62 204.95
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 12.59 -1.04
EBIT Growth (1y) % EBIT 1y % (Qtr) 13.28 238.24
EBT Growth (1y) % EBT 1y % (Qtr) 30.40 173.82
EPS Growth (1y) % EPS 1y % (Qtr) 50.00 8.68
FCF Growth (1y) % FCF 1y % (Qtr) 76.05 20.80
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 16.59 41.66
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.81 0.76
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.03
Cash Ratio Cash Ratio (Qtr) 0.83 1.20
Current Ratio Curr Ratio (Qtr) 2.73 2.69
Debt to Equity Ratio Debt/Equity (Qtr) 0.58 0.43
Interest Cover Ratio Int Coverage (Qtr) 2.75 -12.93
Times Interest Earned Times Interest Earned (Qtr) 2.75 -12.93
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 8.10 -40.66
EBIT Margin % EBIT Margin % (Qtr) 5.15 -52.32
EBT Margin % EBT Margin % (Qtr) 3.28 -59.46
Gross Margin % Gross Margin % (Qtr) 42.00 39.35
Net Profit Margin % Net Margin % (Qtr) 2.60 -60.72