Juniper Networks is an intriguing company worthy of consideration by Enterprising Investors, as the investor type’s only gripe with the company is the lack of dividends. However, the company should not attract Defensive Investors following the ModernGraham approach because of the poor earnings stability or growth over the last ten years, the high PEmg ratio and the lack of dividends. As a result, Enterprising Investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.
The company has grown its EPSmg (normalized earnings) from $0.59 in 2010 to an estimated $0.94 for 2014. This growth is in line with the market’s implied estimate of 6.13%, at least within a margin of safety of the figure. As a result, the ModernGraham valuation model churns out an estimate of intrinsic value falling within a margin of safety relative to the price indicating the company is fairly valued at the present time. Value investors are therefore encouraged to proceed with further research to determine whether Juniper Networks Inc. is suitable for their own individual portfolios.