Long-established in the Software industry, Nutanix Inc (NTNX, Financial) has enjoyed a stellar reputation. It has recently witnessed a surge of 1.86%, juxtaposed with a three-month change of 23.15%. However, fresh insights from the GuruFocus Score Rating hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Nutanix Inc.
Decoding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- 1. Financial strength rank: 4/10
- 2. Profitability rank: 2/10
- 3. Growth rank: 3/10
- 4. GF Value rank: 3/10
- 5. Momentum rank: 9/10
Based on the above method, GuruFocus assigned Nutanix Inc the GF Score of 60 out of 100, which signals poor future outperformance potential.
Understanding Nutanix Inc's Business
Nutanix Inc, with a market cap of $8.44 billion, provides native hybrid cloud capabilities for businesses. The company offers Enterprise Cloud Platform to businesses for various uses such as web-scale engineering and consumer-grade design, virtualization, and storage into a resilient, and software-defined solution. Geographically, it derives a majority of revenue from the United States and also has a presence in Europe, the Middle East, Asia Pacific, Africa, and other regions. The company's sales stand at $1.86 billion with an operating margin of -11.1%.
Financial Strength Breakdown
Nutanix Inc's financial strength indicators present some concerning insights about the company's balance sheet health. Nutanix Inc has an interest coverage ratio of 0, which positions it worse than 0% of 1537 companies in the Software industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. It's worth noting that the esteemed investor Benjamin Graham typically favored companies with an interest coverage ratio of at least five.
The company's Altman Z-Scoreis just -0.2, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years.
Profitability Breakdown
Nutanix Inc's low Profitability rank can also raise warning signals.
Growth Prospects
A lack of significant growth is another area where Nutanix Inc seems to falter, as evidenced by the company's low Growth rank. Lastly, Nutanix Inc predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. It's crucial for investors to consider these factors when making investment decisions. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
