F5 Networks (FFIV, Financial), which specializes in Application Delivery Networking, once again impressed every one with its robust performance. It delivered a good 17% increase in its revenue, which indicates that services and products are seeing good growth in the market. The company is looking forward toward an improvement in its operational performance, and it is targeting a better performance in the future.
Improving adoption of products
As the technology is growing and the products getting complex and sophisticated, F5 finds bright opportunity in these situations. To capture this, the company also added significant functionalities to its web application firewall and access solution. As it is of prime importance for the customers to protect their applications in and out of public and private clouds, F5 is expecting greater demands for its services and products in future, helping it to gain meaningfully on the back of it.
F5 has also made some strategic moves in the past quarters which are expected to start paying off for it in coming quarters. F5 added Secure Web Gateway product to its portfolio of subscription security solutions. In addition, F5 also acquired Defense.Net in the past which enhanced its portfolio by adding a high capacity, cloud based service for protecting data centres from DDOS attack.
The company is counting on these strategic moves to gain traction in this highly competitive market, contributing meaningfully to F5’s revenue. Moreover, F5 is also seeing increased traction with its policy enforcement Module which provides integration subscriber and application awareness, traffic steering reporting and policy enforcement.
F5 is further pleased with the opportunities it is seeing from the TCP Protocol optimization. With TMOS Vancouver and Alpine releases, F5 also introduced 7 specific optimizations which are seeing good traction in the market. This optimization is very attractive as it improves the TCP performance even in the network congestion. This helps in providing faster service to the customers and due to this it is expected to be a key growth driver for F5 in future.
Confident of better performances
However, F5 is confident of better results next quarter as the company is pleased with the performance of the company from the sales perspective. In addition to North American and EMEA regions the company is also seeing robust growth opportunities from regions such as Asia Pacific and Japan. It is pleased with the momentum which it is seeing with its good, better and best sales. Out of the three F5 is expecting strong contribution from the Best Category.
F5 is also concerned about its long term prospects as well. It is expecting Versafe anti-malware solution and its cloud based DDOS service to pay dividend in a phased approach throughout the year. This strengthens its long term prospects and indicates that it can be a good long term holding in future.
Conclusion
However, the company looks slightly over valued with a trailing P/E of 30.95, but its earnings are expected to show good growth with a forward P/E of 17.48. Also, it can be a good long term holding as its earnings are expected to grow at a CAGR of 16.66% for the next five years. Considering all these points, F5 Networks is a good pick.
