Network Appliance
What Fools say:
Here's how NetApp's CAPS score rates against some of its peers and competitors:
Market Cap (millions) |
Trailing P/E Ratio |
CAPS Rating |
|
---|---|---|---|
International Business Machines |
$144,055 |
15.5 |
*** |
Hewlett-Packard |
$128,440 |
20.2 |
**** |
EMC |
$41,530 |
27.8 |
***** |
Network Appliance |
$9,660 |
37.6 |
** |
If NetApp looks expensive today, you should have seen it a year ago, when the P/E ratio was an artery-clogging 57. Let's hear it from our CAPS players, though.
"Storage demand will continue to go up as Internet continues to mature," says one bullish all-star stock picker. "[NetApp] is also a play for bio data analysis, the demand for which will accelerate in the next 3-5 years."
Another fan of the stock thinks that it has "taken a hit over the past year, and it's an excellent time to buy at a discount. Long-term, it doesn't get much more solid than this." On the bearish side, our players see "mediocre" management and EMC stealing market share.
What management says:
Virtual server systems are all the rage these days. EMC is doing it, IBM has virtualization built into its Unix platform by default, and EMC is certainly catering to the needs of VMware
And of course, NetApp is on the virtual wagon too. Management has thrown its weight behind virtual platforms from VMware, Oracle
What management does:
Since corporate storage needs always seem on the rise, and since virtual server support is the current hot tamale, you might expect NetApp to do better over time. That's not quite happening, though.
Sales are rising steadily, but margins are sliding backward, and it all comes out to fewer profit dollars in the end. All is not lost, though: there's plenty of cash flow sloshing around the system here.
4/2006 |
7/2006 |
10/2006 |
1/2007 |
4/2007 |
7/2007 |
|
---|---|---|---|---|---|---|
Gross |
60.8% |
60.6% |
60.5% |
60.6% |
60.8% |
60.9% |
Operating |
15.2% |
13.7% |
12.4% |
11.1% |
9.8% |
8.5% |
Net |
12.9% |
11.7% |
11.5% |
10.3% |
10.6% |
9.7% |
FCF/Revenue |
20.4% |
20.4% |
23.7% |
26% |
24.9% |
25.2% |
Y-O-Y Growth |
4/2006 |
7/2006 |
10/2006 |
1/2007 |
4/2007 |
7/2007 |
---|---|---|---|---|---|---|
Revenue |
29.3% |
32.7% |
34.1% |
35.4% |
35.7% |
28.3% |
Earnings |
18% |
9.2% |
9% |
(1.2%) |
11.7% |
6.3% |
One Fool says:
Network Appliance is kind of like EMC's little brother, addressing the same customers with similar methods and materials. It's just that EMC is doing it better, with more resources, and more cheaply, to boot. And yes, virtual servers are nice, but like I said, everyone is doing it. You can't really claim that strategy as a difference-maker anymore -- just join the herd. That's what NetApp is doing now, and though the company is surrounded by great partners, so is the competition.
Fool on: