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GuruFocus Financial Strength Rank measures how strong a company’s financial situation is. It is based on these factors

1. The debt burden that the company has as measured by its Interest coverage (current year).
2. Debt to revenue ratio. The lower, the better
3. Altman Z-score.

A company ranks high with financial strength is likely to withstand any business slowdowns and recessions.

Financial Strength : 5/10

vs
industry
vs
history
Cash to Debt 0.38
ARRS's Cash to Debt is ranked lower than
51% of the 705 Companies
in the Global Communication Equipment industry.

( Industry Median: 2.15 vs. ARRS: 0.38 )
ARRS' s 10-Year Cash to Debt Range
Min: 0.01   Max: No Debt
Current: 0.38

Equity to Asset 0.35
ARRS's Equity to Asset is ranked lower than
54% of the 677 Companies
in the Global Communication Equipment industry.

( Industry Median: 0.57 vs. ARRS: 0.35 )
ARRS' s 10-Year Equity to Asset Range
Min: 0.26   Max: 0.82
Current: 0.35

0.26
0.82
F-Score: 7
Z-Score: 2.57
M-Score: -2.48
GuruFocus Profitability Rank ranks how profitable a company is and how likely the company’s business will stay that way. It is based on these factors:

1. Operating Margin
2. Trend of the Operating Margin (5-year average). The company with an uptrend profit margin has a higher rank.
••3. Consistency of the profitability
4. Piotroski F-Score
5. Predictability Rank•

The maximum rank is 10. A rank of 7 or higher means a higher profitability and may stay that way. A rank of 3 or lower indicates that the company has had trouble to make a profit.

Profitability Rank is not directly related to the Financial Strength Rank. But if a company is consistently profitable, its financial strength will be stronger.

Profitability & Growth : 7/10

vs
industry
vs
history
Operating margin (%) 5.73
ARRS's Operating margin (%) is ranked higher than
78% of the 697 Companies
in the Global Communication Equipment industry.

( Industry Median: 3.27 vs. ARRS: 5.73 )
ARRS' s 10-Year Operating margin (%) Range
Min: -14.25   Max: 13.43
Current: 5.73

-14.25
13.43
Net-margin (%) 2.50
ARRS's Net-margin (%) is ranked higher than
68% of the 697 Companies
in the Global Communication Equipment industry.

( Industry Median: 3.32 vs. ARRS: 2.50 )
ARRS' s 10-Year Net-margin (%) Range
Min: -26.7   Max: 15.96
Current: 2.5

-26.7
15.96
ROE (%) 9.56
ARRS's ROE (%) is ranked higher than
81% of the 691 Companies
in the Global Communication Equipment industry.

( Industry Median: 5.27 vs. ARRS: 9.56 )
ARRS' s 10-Year ROE (%) Range
Min: -44.35   Max: 27.87
Current: 9.56

-44.35
27.87
ROA (%) 3.01
ARRS's ROA (%) is ranked higher than
70% of the 706 Companies
in the Global Communication Equipment industry.

( Industry Median: 2.96 vs. ARRS: 3.01 )
ARRS' s 10-Year ROA (%) Range
Min: -22.61   Max: 18.44
Current: 3.01

-22.61
18.44
ROC (Joel Greenblatt) (%) 52.77
ARRS's ROC (Joel Greenblatt) (%) is ranked higher than
92% of the 706 Companies
in the Global Communication Equipment industry.

( Industry Median: 9.30 vs. ARRS: 52.77 )
ARRS' s 10-Year ROC (Joel Greenblatt) (%) Range
Min: -48.26   Max: 68.14
Current: 52.77

-48.26
68.14
Revenue Growth (3Y)(%) 47.90
ARRS's Revenue Growth (3Y)(%) is ranked higher than
97% of the 581 Companies
in the Global Communication Equipment industry.

( Industry Median: 3.20 vs. ARRS: 47.90 )
ARRS' s 10-Year Revenue Growth (3Y)(%) Range
Min: -33.2   Max: 47.9
Current: 47.9

-33.2
47.9
EBITDA Growth (3Y)(%) 8.70
ARRS's EBITDA Growth (3Y)(%) is ranked higher than
76% of the 424 Companies
in the Global Communication Equipment industry.

( Industry Median: 3.40 vs. ARRS: 8.70 )
ARRS' s 10-Year EBITDA Growth (3Y)(%) Range
Min: -78.6   Max: 157.1
Current: 8.7

-78.6
157.1
» ARRS's 10-Y Financials

Financials


Revenue & Net Income
Cash & Debt
Oprt. Cash Flow & Free Cash Flow

» Details

Guru Trades

Q4 2013

ARRS Guru Trades in Q4 2013

Steven Cohen 2,312,715 sh (New)
Jim Simons 988,020 sh (+50.24%)
David Dreman 505,149 sh (+12.98%)
FPA Capital Fund 1,444,000 sh (+9.99%)
First Pacific Advisors 10,600,300 sh (+1.08%)
Steven Romick 7,098,800 sh (unchged)
Chuck Royce 995,671 sh (-17.96%)
HOTCHKIS & WILEY 9,189,187 sh (-20.53%)
Paul Tudor Jones 9,200 sh (-75.34%)
» More
Q1 2014

ARRS Guru Trades in Q1 2014

Paul Tudor Jones 34,739 sh (+277.6%)
Jim Simons 1,143,020 sh (+15.69%)
FPA Capital Fund 1,525,200 sh (+5.62%)
First Pacific Advisors 10,736,000 sh (+1.28%)
Steven Romick 7,098,800 sh (unchged)
HOTCHKIS & WILEY 7,702,052 sh (-16.18%)
Chuck Royce 637,671 sh (-35.96%)
Steven Cohen 1,202,054 sh (-48.02%)
David Dreman 229,951 sh (-54.48%)
» More
Q2 2014

ARRS Guru Trades in Q2 2014

Ronald Muhlenkamp 468,835 sh (New)
Manning & Napier Advisors, Inc 555,780 sh (New)
Jim Simons 2,272,420 sh (+98.81%)
FPA Capital Fund 1,831,100 sh (+20.06%)
First Pacific Advisors 11,585,200 sh (+7.91%)
Steven Cohen 1,713,000 sh (unchged)
Steven Romick 7,098,800 sh (unchged)
David Dreman 224,630 sh (-2.31%)
HOTCHKIS & WILEY 7,285,331 sh (-5.41%)
Paul Tudor Jones 26,580 sh (-23.49%)
Chuck Royce 411,000 sh (-35.55%)
» More
Q3 2014

ARRS Guru Trades in Q3 2014

Joel Greenblatt 1,834,577 sh (New)
Manning & Napier Advisors, Inc 765,620 sh (+37.76%)
Ronald Muhlenkamp 603,440 sh (+28.71%)
FPA Capital Fund 2,056,000 sh (+12.28%)
HOTCHKIS & WILEY 7,786,848 sh (+6.88%)
Paul Tudor Jones 27,701 sh (+4.22%)
David Dreman 224,738 sh (+0.05%)
Jim Simons 2,166,220 sh (-4.67%)
First Pacific Advisors 10,586,100 sh (-8.62%)
Steven Cohen 1,416,800 sh (-17.29%)
Steven Romick 5,589,000 sh (-21.27%)
Chuck Royce 307,000 sh (-25.3%)
» More
» Details

Insider Trades

Latest Guru Trades with ARRS

(List those with share number changes of more than 20%, or impact to portfolio more than 0.1%)

GuruDate Trades Impact to Portfolio Price Range * (?) Current Price Change from Average Current Shares
Ronald Muhlenkamp 2014-09-30 Add 28.71%0.69%$29.05 - $35.26 $ 29.46-6%603440
FPA Capital Fund 2014-09-30 Add 12.28%0.69%$29.05 - $35.26 $ 29.46-6%2056000
Joel Greenblatt 2014-09-30 New Buy0.52%$29.05 - $35.26 $ 29.46-6%1834577
Ronald Muhlenkamp 2014-06-30 New Buy2.7%$25.43 - $33.5 $ 29.460%468835
FPA Capital Fund 2014-06-30 Add 20.06%0.97%$25.43 - $33.5 $ 29.460%1831100
David Dreman 2014-03-31 Reduce -54.48%0.51%$24.05 - $31.34 $ 29.468%229951
FPA Capital Fund 2014-03-31 Add 5.62%0.24%$24.05 - $31.34 $ 29.469%1525200
HOTCHKIS & WILEY 2014-03-31 Reduce -16.18%0.16%$24.05 - $31.34 $ 29.468%7702052
FPA Capital Fund 2013-12-31 Add 9.99%0.37%$16.4 - $24.11 $ 29.4655%1444000
HOTCHKIS & WILEY 2013-12-31 Reduce -20.53%0.19%$16.4 - $24.11 $ 29.4655%9189187
David Dreman 2013-12-31 Add 12.98%0.11%$16.4 - $24.11 $ 29.4655%505149
Premium More recent guru trades are included for Premium Members only!!
Premium More recent guru trades are included for USA Subscribe Members only!!
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Peter Lynch Chart ( What is Peter Lynch Charts )

Guru Investment Theses on ARRIS Group Inc

FPA Capital Comments on Arris Group - Oct 23, 2013

We initiated one new position in the third quarter, Aarons (AAN), and purchased shares in several existing investments, including small amounts in Apollo Group (APOL) and Devry (DV) and a larger increase in Arris Group (ARRS). We have written about the for-profit education companies in previous letters, so please refer to those letters should you want to familiarize yourself with APOL or DV.

Let us share some thoughts about ARRS. Our team has followed ARRS since 2005 and purchased the first share for the portfolios we manage in October 2010. Arris provides communication hardware products to cable operators. Every day, we demand faster speeds and more bandwidth from our intern et providers in order to achieve a higher satisfaction with our internet experience. We also ask for more High-definition (HD) channels from our TV/video providers. We want to stream movies and upload our own movies or videos to the internet. All these desires require large capital investments by cable operators.

In order to meet this demand, cable operators need to continuously update their infrastructure and this is where Arris comes in. ARRS manufactures and sells a wide range of technology products so all of the above wishes can be realized. ARRS has been gaining market share in many of its product niches because of the quality of its offerings and its leading technology innovations, which many of its customers and industry experts view as the "gold standard".

We initially invested in Arris at an attractive valuation at close to 12% free cash flow yield and under four times total enterprise value to EBITDA3. At the time of our investment, the company's net cash position made up approximately 35% of its market capitalization. The management team, which we hold in high regard and which has demonstrated a strong operational track record, has been taking advantage of this low valuation by gradually buying back their outstanding convertible debt and reducing their outstanding shares.

However, in December 2012, a major development occurred when ARRS acquired Motorola Home from Google for $2.5b. An industry analyst described the acquisition quite correctly as "minnow eats whale." We believe ARRS got a good deal by buying from a motivated seller. As mentioned earlier, we have been following ARRS for nearly a decade and think this management team is very disciplined. That said, as with any major acquisition, we worry about the integration/execution issues, but we have confidence ARRS's management team will optimize the operations. After the initial cost savings and synergies are accomplished in approximately a year, we believe the Company can generate substantially higher owner earnings and, therefore, good returns on our invested capital.

We continued to take advantage of strong upward momentum in the market place and trimmed a number of positions. When the market is trading at rich multiples, we trim or sell our positions. Currently, the market is expensive so we have more cash than usual. We are absolute value managers so we will stay on the sidelines as long as it takes and husband our cash until excellent investment opportunities become available. On the other hand, we will quickly deploy capital into investments if they are attractive–like we have done on three separate occasions this year.

We have done just that over the last 29 years for the strategy. Our portfolio is very defensive right now and has a great valuation advantage over our benchmark. Our P/E ratio is roughly 13 multiple points lower than Russell 2500's nearly 27x multiple at the end of the quarter.

During the quarter, we also fully exited a position– Alliant Techsystems (ATK). Our long-term clients know that our average holding period is over 6 years. Alliant Techsystems was in the portfolio for only approximately one year, and appreciated more than 115% from our cost basis. Our long-term clients also know that we start trimming our positions when we believe our required margin of safety diminishes. We also sell the position outright if our investment thesis has worked out and/or the investment thesis has changed. All these criteria were met with Alliant Techsystems.

Alliant Techsystems is an armament and aerospace company. The company has three segments. Aerospace is the first one. In this segment, the company provides mainly two products. The first one is what is called a Solid Rocket Motor. Each time NASA sends a cargo into the space, they need one of ATK's propulsion systems. Another product line for the Aerospace segment is aircraft components such as wing skins, fuselage skins, and other composites. The Company's products can be found on F-35s and Airbus A350s.

The second segment is Defense. The Company is the overwhelming majority provider of small caliber ammunition to the U.S. Army. In this segment, they also offer medium and large caliber ammunition and missiles.

The last segment is called Sporting. They sell sporting and law enforcement ammunition, accessories, and tactical gear. These are sold to police departments, Department of Homeland Security, FBI, and U.S. Secret Service on the law enforcement side. On the commercial side, the largest customers are Wal-Mart, Cabela's, Gander Mountain, and large distributors. Our team started looking at defense companies when many investors were worried about defense budget cuts, sequestration, and the end of wars. Alliant's stock price peaked at around $120 in late 2007 and gradually decreased to $90 in 2010 and then started decreasing more rapidly and hit $43 in Q3'12. That's when we started buying and built a small position with an average price of approximately $43.50.

By September 2013, our investment thesis played out – investors who were worried about lower armament sales and NASA contract losses were proved wrong. In 2012, we believed that the selling was overdone, as the uses of armament were mainly for military training, and the rest of the aerospace business was doing well. The stock price subsequently increased to over $95 per share, which is in the range where we exited the position.

As you know, we endeavor to find and invest your capital in more stocks like ATK. Unfortunately, it is currently not a target-rich environment for dedicated Small/Mid-Cap Value investors. We have experienced these droughts several times over the past few decades. Our patience has ultimately been rewarded as we have subsequently been able to put capital to work when the tide changes. We remain optimistic. If we can discover three new stocks for your portfolio in a year like 2013, we are confident that we will be able to put more capital to work when the market experiences greater volatility.

From FPA Capital's third quarter 2013 commentary.
Check out Robert Rodriguez latest stock trades

Ratios

vs
industry
vs
history
P/E(ttm) 33.40
ARRS's P/E(ttm) is ranked higher than
76% of the 761 Companies
in the Global Communication Equipment industry.

( Industry Median: 59.50 vs. ARRS: 33.40 )
ARRS' s 10-Year P/E(ttm) Range
Min: 6.24   Max: 1655.5
Current: 33.4

6.24
1655.5
P/B 2.90
ARRS's P/B is ranked higher than
60% of the 761 Companies
in the Global Communication Equipment industry.

( Industry Median: 2.25 vs. ARRS: 2.90 )
ARRS' s 10-Year P/B Range
Min: 0.59   Max: 3.49
Current: 2.9

0.59
3.49
P/S 0.80
ARRS's P/S is ranked higher than
77% of the 761 Companies
in the Global Communication Equipment industry.

( Industry Median: 1.50 vs. ARRS: 0.80 )
ARRS' s 10-Year P/S Range
Min: 0.57   Max: 2.02
Current: 0.8

0.57
2.02
PFCF 9.10
ARRS's PFCF is ranked higher than
93% of the 761 Companies
in the Global Communication Equipment industry.

( Industry Median: 350.00 vs. ARRS: 9.10 )
ARRS' s 10-Year PFCF Range
Min: 4.57   Max: 83.38
Current: 9.1

4.57
83.38
EV-to-EBIT 17.38
ARRS's EV-to-EBIT is ranked higher than
81% of the 761 Companies
in the Global Communication Equipment industry.

( Industry Median: 61.99 vs. ARRS: 17.38 )
ARRS' s 10-Year EV-to-EBIT Range
Min: -298.6   Max: 581.5
Current: 17.38

-298.6
581.5
PEG 55.33
ARRS's PEG is ranked higher than
86% of the 761 Companies
in the Global Communication Equipment industry.

( Industry Median: 9999.00 vs. ARRS: 55.33 )
ARRS' s 10-Year PEG Range
Min: 3.07   Max: 3.84
Current: 55.33

3.07
3.84
Shiller P/E 287.00
ARRS's Shiller P/E is ranked higher than
77% of the 761 Companies
in the Global Communication Equipment industry.

( Industry Median: 9999.00 vs. ARRS: 287.00 )
ARRS' s 10-Year Shiller P/E Range
Min: 12.9   Max: 1026
Current: 287

12.9
1026
Current Ratio 1.65
ARRS's Current Ratio is ranked higher than
57% of the 695 Companies
in the Global Communication Equipment industry.

( Industry Median: 2.11 vs. ARRS: 1.65 )
ARRS' s 10-Year Current Ratio Range
Min: 1.48   Max: 9.93
Current: 1.65

1.48
9.93
Quick Ratio 1.32
ARRS's Quick Ratio is ranked higher than
60% of the 695 Companies
in the Global Communication Equipment industry.

( Industry Median: 1.68 vs. ARRS: 1.32 )
ARRS' s 10-Year Quick Ratio Range
Min: 0.99   Max: 8.6
Current: 1.32

0.99
8.6

Valuation & Return

vs
industry
vs
history
Price/DCF (Projected) 0.97
ARRS's Price/DCF (Projected) is ranked higher than
89% of the 761 Companies
in the Global Communication Equipment industry.

( Industry Median: 18.50 vs. ARRS: 0.97 )
ARRS' s 10-Year Price/DCF (Projected) Range
Min: 0.56   Max: 12.73
Current: 0.97

0.56
12.73
Price/Median PS Value 0.66
ARRS's Price/Median PS Value is ranked higher than
91% of the 761 Companies
in the Global Communication Equipment industry.

( Industry Median: 1.10 vs. ARRS: 0.66 )
ARRS' s 10-Year Price/Median PS Value Range
Min: 0.28   Max: 2.51
Current: 0.66

0.28
2.51
Price/Peter Lynch Fair Value 3.67
ARRS's Price/Peter Lynch Fair Value is ranked higher than
91% of the 761 Companies
in the Global Communication Equipment industry.

( Industry Median: 9999.00 vs. ARRS: 3.67 )
ARRS' s 10-Year Price/Peter Lynch Fair Value Range
Min: 0.35   Max: 10.28
Current: 3.67

0.35
10.28
Earnings Yield (Greenblatt) 5.80
ARRS's Earnings Yield (Greenblatt) is ranked higher than
79% of the 695 Companies
in the Global Communication Equipment industry.

( Industry Median: 2.60 vs. ARRS: 5.80 )
ARRS' s 10-Year Earnings Yield (Greenblatt) Range
Min: 0.2   Max: 23.5
Current: 5.8

0.2
23.5
Forward Rate of Return (Yacktman) 14.63
ARRS's Forward Rate of Return (Yacktman) is ranked higher than
81% of the 325 Companies
in the Global Communication Equipment industry.

( Industry Median: 11.75 vs. ARRS: 14.63 )
ARRS' s 10-Year Forward Rate of Return (Yacktman) Range
Min: 3.1   Max: 19
Current: 14.63

3.1
19

Business Description

Industry: Communication Equipment » Communication Equipment
Compare:PTFRY, QCOM, CSCO, ERIC, NOK » details
Traded in other countries:20A.Germany,
ARRIS Group Inc is a media entertainment and data communications solutions provider. It operates in two business segments, Customer Premises Equipment, and Network & Cloud, specializing in enabling multichannel video programming distributors including cable, telephone, and digital broadcast satellite operators, and media programmers to deliver rich media, voice, and IP data services to end consumer subscribers. The Company is a developer, manufacturer and supplier of interactive set-top boxes, end-to-end digital video and Internet Protocol Television distribution systems, broadband access infrastructure platforms, and associated data and voice Customer Premises Equipment. The Company provides cable network operators, telco service providers and content programmers with a product offering from the headend, distribution network to the subscribers' premises. The Company has 142 patents and filed 168 utility patent applications and 110 provisional patent applications. It operates manufacturing facilities in Taipei, Taiwan and Tijuana, Mexico. It also uses contract manufacturers located in China, Israel, Thailand, Mexico, and the United States. Its competitors include ADB Global, Casa Systems, Inc., Cisco Systems, Inc., Commscope, Inc., Concurrent Computer Corporation, Emcore Corporation, Ericsson, Harmonic, Inc., Hitron Technologies Americas Inc, Huawei, Humax Co., Netgear, Netgem, Pace Plc, RGB Networks, Sagemcom, Samsung, SeaChange, Inc., SMC Networks, Technicolor, Inc., Tivo Inc., Thomson Video Networks, TOA Technologies, TVC Communications, Inc., Ubee Interactive, Inc., Vecima Networks, Inc., and ZTE.
» More Articles for ARRS

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