Pure Storage, Inc. (NYSE: PSTG)

Sector: Technology Industry: Computer Hardware CIK: 0001474432
Market Cap 21.84 Bn
P/B 15.57
P/E 167.52
P/S 6.27
ROIC (Qtr) 3.69
Div Yield % 0.00
Rev 1y % (Qtr) 16.05
Total Debt (Qtr) 225.55 Mn
Debt/Equity (Qtr) 0.16

About

Pure Storage, Inc. (PSTG) is a global leader in the data storage and management industry, known for its innovative approach to data storage. The company has transformed the way data is stored and managed through its revolutionary all-flash data center platform. With a mission to simplify how people interact with data, Pure Storage has become a major player in the market. The company's primary business activities involve the provision of a unified data storage and management platform. This platform is designed to be highly scalable and can be easily...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 820.59M provides robust 3.64x coverage of total debt 225.55M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 871.99M provide 20x coverage of short-term debt 43.60M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 3.84B provides 17.04x coverage of total debt 225.55M, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 566.72M exceeds capital expenditure of 253.88M by 2.23x, indicating strong organic growth funding capability.
  • Operating cash flow of 820.59M provides strong 9.96x coverage of inventory 82.42M, indicating efficient inventory management.

Bear case

  • Operating cash flow of 820.59M barely covers its investment activities of (150.45M), with a coverage ratio of -5.45, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (150.45M) provide weak support for R&D spending of 935.14M, which is -0.16x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 871.99M provide limited coverage of acquisition spending of (4.26M), which is -204.55x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 820.59M provides insufficient coverage of deferred revenue obligations of 1.96B, which is 0.42x, raising concerns about future service delivery capabilities.
  • High receivables of 620.96M relative to inventory of 82.42M (7.53 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.

Peer comparison

Companies in the Computer Hardware
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ANET Arista Networks, Inc. 164.72 Bn 49.07 19.50 0.00 Bn
2 DELL Dell Technologies Inc. 86.37 Bn 16.20 0.83 31.24 Bn
3 WDC Western Digital Corp 60.34 Bn 23.73 5.03 4.68 Bn
4 STX Seagate Technology Holdings plc 58.67 Bn 34.25 6.14 4.99 Bn
5 SNDK Sandisk Corp 34.41 Bn -19.78 4.42 1.35 Bn
6 PSTG Pure Storage, Inc. 21.84 Bn 167.52 6.27 0.23 Bn
7 HPQ Hp Inc 21.10 Bn 8.34 0.38 9.67 Bn
8 SMCI Super Micro Computer, Inc. 17.45 Bn 22.01 0.83 4.78 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 5.01 2.06
EV to Cash from Ops. EV/CFO 25.78 -0.65
EV to Debt EV to Debt 93.79 56.37
EV to EBIT EV/EBIT 123.62 2.89
EV to EBITDA EV/EBITDA 102.35 -1.74
EV to Free Cash Flow [EV/FCF] EV/FCF 37.33 -7.44
EV to Market Cap EV to Market Cap 0.97 7.64
EV to Revenue EV/Rev 6.07 78.30
Price to Book Value [P/B] P/B 15.57 -28.73
Price to Earnings [P/E] P/E 167.52 6.39
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 1.25
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 12.30
Dividend per Basic Share Div per Share (Qtr) 0.00 0.27
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 7.93
Interest Coverage Interest Coverage 0.00 -105.42
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -18.52 -11.38
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -3.73 867.36
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 4.71
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 0.48 -189.41
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -10.35 -40.76
EBIT Growth (1y) % EBIT 1y % (Qtr) 4.17 -117.00
EBT Growth (1y) % EBT 1y % (Qtr) 4.17 -116.68
EPS Growth (1y) % EPS 1y % (Qtr) 0.00 -70.06
FCF Growth (1y) % FCF 1y % (Qtr) -1.49 712.64
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 11.19 34.90
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.83 0.80
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.06
Cash Ratio Cash Ratio (Qtr) 0.54 7.26
Current Ratio Curr Ratio (Qtr) 1.65 13.59
Debt to Equity Ratio Debt/Equity (Qtr) 0.16 -3.57
Interest Cover Ratio Interest Cover Ratio 0.00 -105.42
Times Interest Earned Times Interest Earned 0.00 -105.42
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 8.80 -629.92
EBIT Margin % EBIT Margin % (Qtr) 4.91 -683.67
EBT Margin % EBT Margin % (Qtr) 4.91 -687.58
Gross Margin % Gross Margin % (Qtr) 69.80 34.79
Net Profit Margin % Net Margin % (Qtr) 3.70 -692.43