Netgear, Inc. (NASDAQ: NTGR)

Sector: Technology Industry: Communication Equipment CIK: 0001122904
Market Cap 712.05 Mn
P/B 1.40
P/E -27.26
P/S 1.02
ROIC (Qtr) -9.66
Div Yield % 0.00
Rev 1y % (Qtr) 0.93
Total Debt (Qtr) 42.99 Mn
Debt/Equity (Qtr) 0.08

About

Price action

Investment thesis

Bull case

  • Strong tangible asset base of 760.92M provides 17.70x coverage of total debt 42.99M, indicating robust asset backing and low credit risk.
  • Tangible assets of 760.92M provide exceptional 27.24x coverage of deferred revenue 27.94M, showing strong service capability backing.
  • Tangible assets of 760.92M provide robust 4.21x coverage of other current liabilities 180.95M, indicating strong asset backing.
  • Cash reserves of 203.48M provide robust 0.85x coverage of current liabilities 239.16M, indicating strong short-term solvency.
  • R&D investment of 82.58M represents healthy 2.96x of deferred revenue 27.94M, indicating strong future innovation pipeline.

Bear case

  • Operating cash flow of 3.58M barely covers its investment activities of (28.83M), with a coverage ratio of -0.12, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (28.83M) provide weak support for R&D spending of 82.58M, which is -0.35x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 203.48M provide limited coverage of acquisition spending of (12.19M), which is -16.70x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 3.58M provides insufficient coverage of deferred revenue obligations of 27.94M, which is 0.13x, raising concerns about future service delivery capabilities.
  • The company's operating cash flow of 3.58M shows concerning coverage of stock compensation expenses of 27.61M, with a 0.13 ratio indicating potential earnings quality issues.

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 0.60 2.22
EV to Cash from Ops. EV/CFO 136.13 10.78
EV to Debt EV to Debt 11.34 25.00
EV to EBIT EV/EBIT -18.97 32.18
EV to EBITDA EV/EBITDA -12.95 10.60
EV to Free Cash Flow [EV/FCF] EV/FCF -35.98 -3.32
EV to Market Cap EV to Market Cap 0.68 1.17
EV to Revenue EV/Rev 0.70 27.87
Price to Book Value [P/B] P/B 1.40 5.35
Price to Earnings [P/E] P/E -27.26 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 Interest Coverage 0.00 -12.93
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -96.82 -73.93
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -25.67 463.06
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 1.39
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -233.43 204.95
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -221.95 -1.04
EBIT Growth (1y) % EBIT 1y % (Qtr) -171.51 238.24
EBT Growth (1y) % EBT 1y % (Qtr) -171.51 173.82
EPS Growth (1y) % EPS 1y % (Qtr) -225.00 8.68
FCF Growth (1y) % FCF 1y % (Qtr) -107.09 20.80
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 24.61 41.66
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.86 0.76
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.03
Cash Ratio Cash Ratio (Qtr) 0.85 1.20
Current Ratio Curr Ratio (Qtr) 2.85 2.69
Debt to Equity Ratio Debt/Equity (Qtr) 0.08 0.43
Interest Cover Ratio Interest Cover Ratio 0.00 -12.93
Times Interest Earned Times Interest Earned 0.00 -12.93
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -2.70 -40.66
EBIT Margin % EBIT Margin % (Qtr) -3.67 -52.32
EBT Margin % EBT Margin % (Qtr) -3.67 -59.46
Gross Margin % Gross Margin % (Qtr) 36.00 39.35
Net Profit Margin % Net Margin % (Qtr) -3.70 -60.72