GEN DIGITAL INC (GEN) Stock Fundamental Analysis
NASDAQ:GEN - Nasdaq - US6687711084 - Common Stock - Currency: USD
We assign a fundamental rating of 5 out of 10 to GEN. GEN was compared to 283 industry peers in the Software industry. While GEN belongs to the best of the industry regarding profitability, there are concerns on its financial health. GEN may be a bit undervalued, certainly considering the very reasonable score on growth
1. Profitability
1.1 Basic Checks
GEN had positive earnings in the past year.
GEN had a positive operating cash flow in the past year.
In the past 5 years GEN has always been profitable.
Each year in the past 5 years GEN had a positive operating cash flow.
1.2 Ratios
With a decent Return On Assets value of 4.13%, GEN is doing good in the industry, outperforming 72.79% of the companies in the same industry.
The Return On Equity of GEN (29.52%) is better than 89.40% of its industry peers.
Looking at the Return On Invested Capital, with a value of 8.72%, GEN belongs to the top of the industry, outperforming 82.69% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.13% | ||
| ROE | 29.52% | ||
| ROIC | 8.72% |
ROA(3y)N/A
ROA(5y)N/A
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)N/A
ROIC(5y)N/A
1.3 Margins
With an excellent Profit Margin value of 16.32%, GEN belongs to the best of the industry, outperforming 81.63% of the companies in the same industry.
In the last couple of years the Profit Margin of GEN has declined.
The Operating Margin of GEN (41.57%) is better than 97.17% of its industry peers.
GEN's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 80.29%, GEN belongs to the top of the industry, outperforming 81.63% of the companies in the same industry.
GEN's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 41.57% | ||
| PM (TTM) | 16.32% | ||
| GM | 80.29% |
OM growth 3Y3.57%
OM growth 5Y10.54%
PM growth 3Y-18.24%
PM growth 5Y-36.32%
GM growth 3Y-2.04%
GM growth 5Y-0.95%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), GEN is destroying value.
There is no outstanding debt for GEN. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.
2.2 Solvency
GEN has an Altman-Z score of 1.20. This is a bad value and indicates that GEN is not financially healthy and even has some risk of bankruptcy.
The Altman-Z score of GEN (1.20) is worse than 60.07% of its industry peers.
GEN has a debt to FCF ratio of 3.98. This is a good value and a sign of high solvency as GEN would need 3.98 years to pay back of all of its debts.
The Debt to FCF ratio of GEN (3.98) is better than 60.78% of its industry peers.
GEN has a Debt/Equity ratio of 3.29. This is a high value indicating a heavy dependency on external financing.
Looking at the Debt to Equity ratio, with a value of 3.29, GEN is doing worse than 82.69% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 3.29 | ||
| Debt/FCF | 3.98 | ||
| Altman-Z | 1.2 |
ROIC/WACC0.86
WACC10.19%
2.3 Liquidity
GEN has a Current Ratio of 0.35. This is a bad value and indicates that GEN is not financially healthy enough and could expect problems in meeting its short term obligations.
GEN has a Current ratio of 0.35. This is amonst the worse of the industry: GEN underperforms 92.93% of its industry peers.
GEN has a Quick Ratio of 0.35. This is a bad value and indicates that GEN is not financially healthy enough and could expect problems in meeting its short term obligations.
GEN has a Quick ratio of 0.35. This is amonst the worse of the industry: GEN underperforms 92.93% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.35 | ||
| Quick Ratio | 0.35 |
3. Growth
3.1 Past
GEN shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 13.27%, which is quite good.
Measured over the past years, GEN shows a quite strong growth in Earnings Per Share. The EPS has been growing by 9.66% on average per year.
The Revenue has been growing slightly by 3.23% in the past year.
GEN shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 9.58% yearly.
EPS 1Y (TTM)13.27%
EPS 3Y8.25%
EPS 5Y9.66%
EPS Q2Q%11.32%
Revenue 1Y (TTM)3.23%
Revenue growth 3Y12.06%
Revenue growth 5Y9.58%
Sales Q2Q%4.45%
3.2 Future
Based on estimates for the next years, GEN will show a quite strong growth in Earnings Per Share. The EPS will grow by 8.09% on average per year.
Based on estimates for the next years, GEN will show a small growth in Revenue. The Revenue will grow by 2.48% on average per year.
EPS Next Y13.77%
EPS Next 2Y12.69%
EPS Next 3Y11.87%
EPS Next 5Y8.09%
Revenue Next Year21.12%
Revenue Next 2Y12.67%
Revenue Next 3Y10.31%
Revenue Next 5Y2.48%
3.3 Evolution
The EPS growth rate is stable: in the next years the growth will be about the same than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 12.43, the valuation of GEN can be described as correct.
Based on the Price/Earnings ratio, GEN is valued cheaper than 87.99% of the companies in the same industry.
GEN is valuated cheaply when we compare the Price/Earnings ratio to 26.03, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 10.93, which indicates a very decent valuation of GEN.
89.05% of the companies in the same industry are more expensive than GEN, based on the Price/Forward Earnings ratio.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.94, GEN is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.43 | ||
| Fwd PE | 10.93 |
4.2 Price Multiples
89.75% of the companies in the same industry are more expensive than GEN, based on the Enterprise Value to EBITDA ratio.
Based on the Price/Free Cash Flow ratio, GEN is valued cheaper than 95.41% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 7.98 | ||
| EV/EBITDA | 12.04 |
4.3 Compensation for Growth
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The decent profitability rating of GEN may justify a higher PE ratio.
PEG (NY)0.9
PEG (5Y)1.29
EPS Next 2Y12.69%
EPS Next 3Y11.87%
5. Dividend
5.1 Amount
GEN has a Yearly Dividend Yield of 1.73%.
Compared to an average industry Dividend Yield of 14.19, GEN pays a better dividend. On top of this GEN pays more dividend than 95.76% of the companies listed in the same industry.
GEN's Dividend Yield is slightly below the S&P500 average, which is at 2.36.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.73% |
5.2 History
On average, the dividend of GEN grows each year by 8.13%, which is quite nice.
GEN has been paying a dividend for at least 10 years, so it has a reliable track record.
GEN has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)8.13%
Div Incr Years0
Div Non Decr Years3
5.3 Sustainability
49.45% of the earnings are spent on dividend by GEN. This is a bit on the high side, but may be sustainable.
GEN's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP49.45%
EPS Next 2Y12.69%
EPS Next 3Y11.87%
27.6
-0.81 (-2.85%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners91.59%
Inst Owner Change0%
Ins Owners9.43%
Ins Owner Change0.54%
Market Cap17.01B
Analysts75.71
Price Target31.92 (15.65%)
Short Float %2.93%
Short Ratio3.67
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.73% |
Yearly Dividend0.51
Dividend Growth(5Y)8.13%
DP49.45%
Div Incr Years0
Div Non Decr Years3
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-0.22%
Min EPS beat(2)-0.99%
Max EPS beat(2)0.55%
EPS beat(4)2
Avg EPS beat(4)0.12%
Min EPS beat(4)-0.99%
Max EPS beat(4)1.3%
EPS beat(8)4
Avg EPS beat(8)0.27%
EPS beat(12)8
Avg EPS beat(12)1.08%
EPS beat(16)12
Avg EPS beat(16)1.25%
Revenue beat(2)0
Avg Revenue beat(2)-0.74%
Min Revenue beat(2)-0.9%
Max Revenue beat(2)-0.57%
Revenue beat(4)0
Avg Revenue beat(4)-0.81%
Min Revenue beat(4)-1%
Max Revenue beat(4)-0.57%
Revenue beat(8)0
Avg Revenue beat(8)-0.82%
Revenue beat(12)1
Avg Revenue beat(12)-0.24%
Revenue beat(16)2
Avg Revenue beat(16)-0.31%
PT rev (1m)-1.57%
PT rev (3m)-2.28%
EPS NQ rev (1m)0%
EPS NQ rev (3m)0%
EPS NY rev (1m)3.15%
EPS NY rev (3m)2.85%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-0.1%
Revenue NY rev (1m)17.04%
Revenue NY rev (3m)17.07%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.43 | ||
| Fwd PE | 10.93 | ||
| P/S | 4.37 | ||
| P/FCF | 7.98 | ||
| P/OCF | 7.93 | ||
| P/B | 7.91 | ||
| P/tB | N/A | ||
| EV/EBITDA | 12.04 |
EPS(TTM)2.22
EY8.04%
EPS(NY)2.53
Fwd EY9.15%
FCF(TTM)3.46
FCFY12.53%
OCF(TTM)3.48
OCFY12.62%
SpS6.32
BVpS3.49
TBVpS-16.8
PEG (NY)0.9
PEG (5Y)1.29
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.13% | ||
| ROE | 29.52% | ||
| ROCE | 13.95% | ||
| ROIC | 8.72% | ||
| ROICexc | 9.43% | ||
| ROICexgc | N/A | ||
| OM | 41.57% | ||
| PM (TTM) | 16.32% | ||
| GM | 80.29% | ||
| FCFM | 54.75% |
ROA(3y)N/A
ROA(5y)N/A
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)N/A
ROIC(5y)N/A
ROICexc(3y)N/A
ROICexc(5y)N/A
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)N/A
ROCE(5y)N/A
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3YN/A
ROICexc growth 5YN/A
OM growth 3Y3.57%
OM growth 5Y10.54%
PM growth 3Y-18.24%
PM growth 5Y-36.32%
GM growth 3Y-2.04%
GM growth 5Y-0.95%
F-Score6
Asset Turnover0.25
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 3.29 | ||
| Debt/FCF | 3.98 | ||
| Debt/EBITDA | 3.46 | ||
| Cap/Depr | 3.52% | ||
| Cap/Sales | 0.39% | ||
| Interest Coverage | 2.87 | ||
| Cash Conversion | 104.99% | ||
| Profit Quality | 335.59% | ||
| Current Ratio | 0.35 | ||
| Quick Ratio | 0.35 | ||
| Altman-Z | 1.2 |
F-Score6
WACC10.19%
ROIC/WACC0.86
Cap/Depr(3y)3.18%
Cap/Depr(5y)3.56%
Cap/Sales(3y)0.36%
Cap/Sales(5y)0.31%
Profit Quality(3y)193.32%
Profit Quality(5y)164.42%
High Growth Momentum
Growth
EPS 1Y (TTM)13.27%
EPS 3Y8.25%
EPS 5Y9.66%
EPS Q2Q%11.32%
EPS Next Y13.77%
EPS Next 2Y12.69%
EPS Next 3Y11.87%
EPS Next 5Y8.09%
Revenue 1Y (TTM)3.23%
Revenue growth 3Y12.06%
Revenue growth 5Y9.58%
Sales Q2Q%4.45%
Revenue Next Year21.12%
Revenue Next 2Y12.67%
Revenue Next 3Y10.31%
Revenue Next 5Y2.48%
EBIT growth 1Y43.31%
EBIT growth 3Y16.07%
EBIT growth 5Y21.14%
EBIT Next Year7.41%
EBIT Next 3Y3.91%
EBIT Next 5Y3.55%
FCF growth 1Y119.24%
FCF growth 3Y7.6%
FCF growth 5YN/A
OCF growth 1Y116.77%
OCF growth 3Y7.82%
OCF growth 5YN/A