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Validea's pick of the week provides a detailed report on a company that scores well in the stock-screening service's model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor has a distribution agreement with Validea.ca. Try it.
F5 Networks Inc. is an application delivery networking firm that makes hardware, software, and virtual solutions to help handle growing voice, data, and video traffic. It has an $8.6-billion (U.S.) market cap.
The company gets strong interest from the Martin Zweig-based model, which likes that its long-term EPS growth is high (21 per cent, using an average of the 3-, 4-, and 5-year EPS growth rates) and driven by sales growth (18 per cent long-term, using an average of the 3-, 4-, and 5-year sales growth rates). The Zweig model also likes that EPS growth is accelerating - it jumped to 39 per cent last quarter.
F5 has no long-term debt. It has 24 per cent return on equity over the past 12 months and 19 per cent profit margins versus the computer networks industry average of 0 per cent.
The Warren Buffett-based model likes its 17.3-per-cent return on retained earnings over the past decade. The Buffett model also likes that EPS have dipped just once in past decade.
The company has a stellar 53-per-cent return on capital (EBIT/tangible capital employed) using the Joel Greenblatt-based model's metric.
John Reese is long FFIV.
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