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Aruba Networks Inc (NAS:ARUN)
Intrinsic Value: Projected FCF
$12.85 (As of Today)

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company. The details of how we calculate the intrinsic value of stocks are described in detail here.

As of today, Aruba Networks Inc's projected FCF intrinsic value is $12.85. The stock price of Aruba Networks Inc is $24.67. Therefore, Aruba Networks Inc's Price to Intrinsic Value: Projected FCF Ratio of today is 1.9.

ARUN' s 10-Year Price to Intrinsic Value: Projected FCF Range
Min: 1.29   Max: 18.14
Current: 1.92

1.29
18.14

During the past 13 years, the highest Price to Intrinsic Value: Projected FCF Ratio of Aruba Networks Inc was 18.14. The lowest was 1.29. And the median was 2.59.

ARUN's Price to Intrinsic Value: Projected FCF is ranked lower than
66% of the 240 Companies
in the Global Communication Equipment industry.

( Industry Median: 1.27 vs. ARUN: 1.92 )

Definition

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company.

The details of how we calculate the intrinsic value of stocks are described in detail here.

This method smooths out the free cash flow over the past 6-7 years, multiplies the results by a growth multiple, and adds a portion of total equity.

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + 0.8*Total Equity(most recent))/Shares Outstanding

In the case of negative total equity, the following formula is used (see the Total Equity section for the reason):

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + Total Equity(most recent)/0.8)/Shares Outstanding


Here Aruba Networks Inc's FCF(6 year avg) is calculate as

Aruba Networks Inc Quarterly Data

201210201301201304201307201310201401201404201407201410201501
total_freecashflow 31.640.220.140.616.630.121.322.440.649.9
201004201007201010201101201104201107201110201201201204201207
total_freecashflow 10.08.513.28.17.719.113.123.924.937.8
200904200907200910201001
total_freecashflow -5.310.610.0-7.9

Add all the Free Cash Flow together and divide 6 will get Aruba Networks Inc's FCF(6 year avg) = $81.21.

Aruba Networks Inc's Intrinsic Value: Projected FCF for today is calculated as

Intrinsic Value=(Growth Multiple*Free Cash Flow(6 year avg)+Total Equity(Jan15)*0.8)/Shares Outstanding
=(14.8626533105*81.2146666667+312.063*0.8)/113.393
=12.85

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.


Explanation

The growth multiple is capped between 8.35 and 17.74.

Total equity weighting is more art than science and it should always be revisited in more detail when researching a company. Weightings from 0% to 100% to more than 100% are possible. 80% was chosen as a happy medium after taking the above ideas into consideration. Learn more here.

Aruba Networks Inc's Price to Intrinsic Value: Projected FCF Ratio for today is calculated as

Price to Intrinsic Value: Projected FCF=Share Price/Intrinsic Value: Projected FCF
=24.67/12.8466116462
=1.92

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.


Related Terms

Intrinsic Value: DCF (Earnings Based), Intrinsic Value: DCF (FCF Based), Free Cash Flow


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Aruba Networks Inc Annual Data

Jul05Jul06Jul07Jul08Jul09Jul10Jul11Jul12Jul13Jul14
Projected FCF 0.000.000.000.000.001.833.375.9410.2811.91

Aruba Networks Inc Quarterly Data

Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15
Projected FCF 7.008.059.7310.2810.2810.8911.6111.9111.9912.85
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