CommScope Holding Company, Inc. (NASDAQ: COMM)

Sector: Technology Industry: Communication Equipment CIK: 0001517228
Market Cap 3.93 Bn
P/B -1.68
P/E 4.42
P/S 0.74
ROIC (Qtr) 11.68
Div Yield % 0.00
Rev 1y % (Qtr) 50.59
Total Debt (Qtr) 7.25 Bn
Debt/Equity (Qtr) -3.09

About

CommScope Holding Company, Inc. (COMM) is a global entity that operates in the communication, data center, and entertainment networks industry. The company's primary business activities involve the provision of infrastructure solutions, encompassing a broad range of products and services. These offerings cater to the needs of enterprises and service providers in over 150 countries, making CommScope a truly global player. CommScope's revenue generation is primarily based on its four operational segments: Connectivity and Cable Solutions (CCS), Outdoor...

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Price action

Investment thesis

Bull case

  • Robust free cash flow of 277.70M exceeds capital expenditure of 41.80M by 6.64x, indicating strong organic growth funding capability.
  • Tangible assets of 3.95B provide robust 6.07x coverage of other current liabilities 651.30M, indicating strong asset backing.
  • Cash reserves of 705.30M provide solid 1.39x coverage of other non-current liabilities 506.40M, indicating strong liquidity.
  • Operating cash flow of 319.50M provides strong 3.54x coverage of tax liabilities 90.30M, showing excellent fiscal position.
  • Retained earnings of (4.40B) represent substantial 1.88x of equity (2.34B), indicating strong internal capital generation.

Bear case

  • Operating cash flow of 319.50M barely covers its investment activities of 2B, with a coverage ratio of 0.16, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Cash reserves of 705.30M provide limited coverage of acquisition spending of 2.04B, which is 0.35x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 319.50M provides minimal -1.33x coverage of tax expenses of (239.60M), suggesting potential tax planning inefficiencies or unsustainable tax positions.
  • High depreciation of 310.70M relative to operating cash flow of 319.50M, which is 0.97x suggests significant maintenance capital requirements affecting free cash flow.
  • Free cash flow of 277.70M represents just -0.14x of debt issuance (2B), suggesting concerning reliance on leverage rather than internal cash generation for growth.

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 1.34 2.22
EV to Cash from Ops. EV/CFO 33.20 10.78
EV to Debt EV to Debt 1.46 25.00
EV to EBIT EV/EBIT 7.66 32.18
EV to EBITDA EV/EBITDA 9.63 10.60
EV to Free Cash Flow [EV/FCF] EV/FCF 38.20 -3.32
EV to Market Cap EV to Market Cap 2.70 1.17
EV to Revenue EV/Rev 2.00 27.87
Price to Book Value [P/B] P/B -1.68 5.35
Price to Earnings [P/E] P/E 4.42 2.67
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 13.09 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) 2.07 -12.93
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -703.85 -73.93
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 79.88 463.06
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 1.39
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 8,922.43 204.95
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 159.32 -1.04
EBIT Growth (1y) % EBIT 1y % (Qtr) 8,756.25 238.24
EBT Growth (1y) % EBT 1y % (Qtr) 203.88 173.82
EPS Growth (1y) % EPS 1y % (Qtr) 189.72 8.68
FCF Growth (1y) % FCF 1y % (Qtr) 380.45 20.80
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 48.04 41.66
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.67 0.76
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.03
Cash Ratio Cash Ratio (Qtr) 0.57 1.20
Current Ratio Curr Ratio (Qtr) 2.25 2.69
Debt to Equity Ratio Debt/Equity (Qtr) -3.09 0.43
Interest Cover Ratio Int Coverage (Qtr) 2.07 -12.93
Times Interest Earned Times Interest Earned (Qtr) 2.07 -12.93
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 32.00 -40.66
EBIT Margin % EBIT Margin % (Qtr) 26.14 -52.32
EBT Margin % EBT Margin % (Qtr) 13.53 -59.46
Gross Margin % Gross Margin % (Qtr) 41.10 39.35
Net Profit Margin % Net Margin % (Qtr) 16.80 -60.72