Software Stocks

CommVault Systems Inc Valuation – April 2018 $CVLT

Company Profile (excerpt from Reuters): Commvault Systems, Inc. (Commvault), incorporated on April 19, 1996, is a provider of data and information management software applications and related services. The Company develops, markets and sells a suite of software applications and services, primarily in North America, Europe, Australia and Asia, that provides its customers with data protection solutions supporting all operating systems, applications, and databases on virtual and physical servers, Network Attached Storage (NAS) shares, cloud-based infrastructures, and mobile devices; management through a single console; multiple protection methods, including backup and archive, snapshot management, replication, and content indexing for eDiscovery; storage management using deduplication for disk, tape and cloud; integration with the storage arrays; complete virtual infrastructure management supporting multiple hypervisors; security capabilities to limit access to critical data; policy-based data management, and an end user experience that allows them to protect, find and recover their own data using common tools, such as Web browsers, Microsoft Outlook and File Explorer. The Company also provides its customers with a range of professional and customer support services.

CVLT Chart

CVLT data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CVLT – April 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $2,979,673,532 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.01 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -190.35% Fail
6. Moderate PEmg Ratio PEmg < 20 -356.72 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7.59 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.01 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$0.19
MG Growth Estimate -4.25%
MG Value $4.93
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$2.70
MG Value based on 0% Growth -$1.58
Market Implied Growth Rate -182.61%
Current Price $66.35
% of Intrinsic Value 1346.20%

CommVault Systems, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the lack of earnings stability or growth over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $0.95 in 2014 to an estimated $-0.19 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into CommVault Systems, Inc. revealed the company was trading above its Graham Number of $0. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was -356.72, which was below the industry average of 49.59, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $4.93.

CommVault Systems, Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $4.93
Graham Number $0.00
PEmg -356.72
Current Ratio 2.01
PB Ratio 7.59
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $616,418,000
Total Current Liabilities $306,904,000
Long-Term Debt $0
Total Assets $789,274,000
Intangible Assets $0
Total Liabilities $393,192,000
Shares Outstanding (Diluted Average) 45,291,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$1.04
Mar2017 $0.01
Mar2016 $0.00
Mar2015 $0.54
Mar2014 $1.29
Mar2013 $1.10
Mar2012 $0.68
Mar2011 $0.45
Mar2010 $0.41
Mar2009 $0.28
Mar2008 $0.46
Mar2007 -$1.35
Mar2006 $0.17
Mar2005 -$0.28
Mar2004 -$0.93
Mar2003 -$1.20
Mar2002 -$1.96

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$0.19
Mar2017 $0.36
Mar2016 $0.59
Mar2015 $0.86
Mar2014 $0.95
Mar2013 $0.71
Mar2012 $0.50
Mar2011 $0.29
Mar2010 $0.13
Mar2009 -$0.05
Mar2008 -$0.27
Mar2007 -$0.66
Mar2006 -$0.49
Mar2005 -$0.84
Mar2004 -$1.02
Mar2003 -$0.92
Mar2002 -$0.65

Recommended Reading:

Other ModernGraham posts about the company

CommVault Systems Inc Valuation – Initial Coverage $CVLT

Other ModernGraham posts about related companies

F5 Networks Inc Valuation – April 2018 $FFIV
Cadence Design Systems Inc Valuation – Initial Coverage $CDNS
Oracle Corporation Valuation – March 2018 $ORCL
CA Inc Valuation – March 2018 $CA
Red Hat Inc Valuation – March 2018 $RHT
Alphabet Inc Valuation – March 2018 $GOOGL
Ansys Inc Valuation – March 2018 $ANSS
Citrix Systems Inc Valuation – February 2018 $CTXS
Microsoft Corp Valuation – February 2018 $MSFT
Cisco Systems Inc Valuation – February 2018 $CSCO

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Back To Top