Netscout Systems Inc (NASDAQ: NTCT)

Sector: Technology Industry: Software - Infrastructure CIK: 0001078075
Market Cap 2.10 Bn
P/B 1.28
P/E 21.88
P/S 2.44
ROIC (Qtr) 5.53
Div Yield % 0.00
Rev 1y % (Qtr) -0.53
Total Debt (Qtr) 41.80 Mn
Debt/Equity (Qtr) 0.03
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About

NetScout Systems, Inc., commonly recognized by its ticker symbol NTCT, operates in the service assurance and cybersecurity solutions industry. The company has a rich history dating back to 1984, where it has established itself as a pioneer in using IP-based network traffic to aid organizations in managing and optimizing the delivery of services and applications over their networks. The company's main business activities revolve around providing visibility and protection for enterprise and service provider customers across various markets, including...

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Investment thesis

Bull case

  • Strong operating cash flow of 283.80M provides robust 6.79x coverage of total debt 41.80M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 540.64M provide 53.78x coverage of short-term debt 10.05M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 283.80M provides exceptional 137.97x coverage of interest expenses 2.06M, showing strong debt service capability.
  • Strong tangible asset base of 1.03B provides 24.54x coverage of total debt 41.80M, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 275.48M exceeds capital expenditure of 8.32M by 33.09x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 283.80M barely covers its investment activities of (26.40M), with a coverage ratio of -10.75, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (26.40M) provide weak support for R&D spending of 156.43M, which is -0.17x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 283.80M provides insufficient coverage of deferred revenue obligations of 487M, which is 0.58x, raising concerns about future service delivery capabilities.
  • High receivables of 234.55M relative to inventory of 12.41M (18.90 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • The company's operating cash flow of 283.80M shows concerning coverage of stock compensation expenses of 61.55M, with a 4.61 ratio indicating potential earnings quality issues.

Product and Service Breakdown of Revenue (2025)

Geographical Breakdown of Revenue (2025)

Peer comparison

Companies in the Software - Infrastructure
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MSFT Microsoft Corp 2,948.93 Bn 24.73 9.65 57.61 Bn
2 ORCL Oracle Corp 734.55 Bn 67.24 19.76 124.39 Bn
3 PLTR Palantir Technologies Inc. 313.28 Bn 192.78 70.00 0.23 Bn
4 PANW Palo Alto Networks Inc 109.38 Bn 97.90 11.45 0.35 Bn
5 CRWD CrowdStrike Holdings, Inc. 102.48 Bn -326.20 22.45 0.82 Bn
6 SNPS Synopsys Inc 69.14 Bn 51.90 9.80 14.29 Bn
7 NET Cloudflare, Inc. 66.52 Bn -645.60 33.04 3.50 Bn
8 FTNT Fortinet, Inc. 62.73 Bn 33.48 9.57 1.00 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.71 2.10
EV to Cash from Ops. EV/CFO 5.84 3.92
EV to Debt EV to Debt 39.68 -2.43
EV to EBIT EV/EBIT 14.37 11.57
EV to EBITDA EV/EBITDA 9.89 18.19
EV to Free Cash Flow [EV/FCF] EV/FCF 6.02 19.98
EV to Market Cap EV to Market Cap 0.79 1.27
EV to Revenue EV/Rev 1.93 29.29
Price to Book Value [P/B] P/B 1.28 4.97
Price to Earnings [P/E] P/E 21.88 -12.45
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 0.21
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 2.73
Dividend per Basic Share Div per Share (Qtr) 0.00 0.11
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 1.67
Interest Coverage Int. cover (Qtr) 56.11 -16.04
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -48.01 -403.22
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 35.72 223.80
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -0.28
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 123.85 585.97
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 146.80 5.89
EBIT Growth (1y) % EBIT 1y % (Qtr) 128.26 27.96
EBT Growth (1y) % EBT 1y % (Qtr) 127.19 20.61
EPS Growth (1y) % EPS 1y % (Qtr) 122.91 144.77
FCF Growth (1y) % FCF 1y % (Qtr) 67.87 50.30
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 7.04 45.98
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.37 0.65
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 1.22 1.23
Current Ratio Curr Ratio (Qtr) 1.94 2.63
Debt to Equity Ratio Debt/Equity (Qtr) 0.03 0.73
Interest Cover Ratio Int Coverage (Qtr) 56.11 -16.04
Times Interest Earned Times Interest Earned (Qtr) 56.11 -16.04
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 20.10 -549.97
EBIT Margin % EBIT Margin % (Qtr) 13.40 -240.33
EBT Margin % EBT Margin % (Qtr) 13.16 -608.68
Gross Margin % Gross Margin % (Qtr) 79.20 51.14
Net Profit Margin % Net Margin % (Qtr) 11.10 -611.28