- By GF Value
The stock of Citrix Systems (NAS:CTXS, 30-year Financials) is estimated to be fairly valued, according to GuruFocus Value calculation. GuruFocus Value is GuruFocus' estimate of the fair value at which the stock should be traded. It is calculated based on the historical multiples that the stock has traded at, the past business growth and analyst estimates of future business performance. If the price of a stock is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher. At its current price of $138.39 per share and the market cap of $17 billion, Citrix Systems stock appears to be fairly valued. GF Value for Citrix Systems is shown in the chart below.
Because Citrix Systems is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth, which averaged 12.2% over the past three years and is estimated to grow 6.97% annually over the next three to five years.
Link: These companies may deliever higher future returns at reduced risk.
Since investing in companies with low financial strength could result in permanent capital loss, investors must carefully review a company's financial strength before deciding whether to buy shares. Looking at the cash-to-debt ratio and interest coverage can give a good initial perspective on the company's financial strength. Citrix Systems has a cash-to-debt ratio of 0.46, which ranks worse than 81% of the companies in Software industry. Based on this, GuruFocus ranks Citrix Systems's financial strength as 5 out of 10, suggesting fair balance sheet. This is the debt and cash of Citrix Systems over the past years:
It poses less risk to invest in profitable companies, especially those that have demonstrated consistent profitability over the long term. A company with high profit margins is also typically a safer investment than one with low profit margins. Citrix Systems has been profitable 9 over the past 10 years. Over the past twelve months, the company had a revenue of $3.2 billion and earnings of $4 a share. Its operating margin is 19.18%, which ranks better than 87% of the companies in Software industry. Overall, GuruFocus ranks the profitability of Citrix Systems at 9 out of 10, which indicates strong profitability. This is the revenue and net income of Citrix Systems over the past years: