Why F5 Networks Shares Couldn't Hold Onto Bigger Gains

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of F5 Networks (NASDAQ: FFIV  ) had gained as much as 12% during early trading today, but have since slipped to a far less impressive (but still respectable) gain of 4% as of this writing. Investors seem to have cooled to the prospect of a bigger share buyback in light of what appears to be weak earnings on deck for the in-progress quarter.

So what: F5 had a decent earnings report for its fiscal second quarter: revenue of $350.2 million was right in line with analyst estimates, and earnings per share of $1.07 were $0.01 better than the consensus. The company also authorized another $200 million for share buybacks, which, at current prices, is about 3.5% of its market cap. However, guidance on both top and bottom lines was below expectations, as F5 now expects between $355 and $365 million in revenue, and between $1.06 and $1.09 in earnings per share, against a consensus of $366.9 million and $1.11, respectively.

Now what: F5 is still moving forward, but progress now seems to be a bit slower than previously expected. However, the company is still reasonably valued -- a 21 P/E after losing some of those early gains -- and is still making progress. If you're already invested, there's no reason why you shouldn't hang on for the ride.

Want more news and updates? Add F5 Networks to your Watchlist now.

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Related Tickers

9/28/2016 4:00 PM
FFIV $124.03 Up +1.17 +0.95%
F5 Networks CAPS Rating: ****