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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Extreme Networks, Inc. (XNAS:EXTR) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
EXTR
Name:
EXTREME NETWORKS, INC. (XNAS:EXTR)
Sector:
36.84M
Industry:
Communication Equipment
CEO:
Mr. Edward Meyercord
Total Employees:
2,643
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -414.85% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF EXTREME NETWORKS, INC.(EXTR) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND COMMUNICATION EQUIPMENT INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
14.12
One Month Price Target:
$14.28
Six Month Price Target :
$15.1
Likely Price in One Year's Time:
Ticker:
$16.07
Likely Trading Range Today Under (Normal Volatility)
$14.04
Price Upper limit ($) :
$14.25
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$12.88
This week:
$11.35
This month :
$8.58
Other Primary facts
Market Cap:
1.80B
Market Cap Classification:
Small Cap
Number of Shares
IPO Date:
131.16M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
24.09%
-27.4%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$19.86
$17.19
$8.38
$11.05
Medium risk (<10%) entry points
Buy Call
Sell Call
$16.32
Buy Put:
Sell Put:
$15.74
$11.92
$12.50
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
EXTR
Sharpe Ratio:
4.49%
Comparison:
EXTR, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is 246.29% higher than the industry
& ratio is 96.96% higher than the market/S&P 500 average
Average Returns/Yield of
EXTR
Daily returns:
0.21%
Weekly returns:
1.03%
Monthly returns:
4.10%
Yearly returns:
12.89%
Comparison of returns:
Average annual returns/yield (last 3 years) is 282.10% above industry average
Classification:
EXTR, is amongst the top 20% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.5
Statistical test of Returns:
EXTR has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
4.37%
Weekly Volatility:
9.78%
Monthly Volatility:
19.55%
Yearly Volatility:
67.74%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.97%
Volatility in last five trading days has been -55.03% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-8.77%
Weekly VaR:
-19.62%
Monthly VaR:
-39.24%
How Much Can the price of
EXTR
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-32%
Worst case (decline):
>85%
This translates to price declining to:
$9.55
This translates to price declining to:
$2.12
Severe Crash Probability
Risk of crash in next 6/12 months: Very high (>70%)
What is Value at Risk (VaR)?
Risk Fundamentals
EXTR is a 176.97% riskier investment compared to the market/S&P 500 & is 137.28% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is 37.99% above industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
EXTR
Beta in relation to market/S&P 500--2.06
Expected beta in 1 year's time:
1.099
Expected beta in 3 year's time:
1.555
Unlevered (debt free) Beta:
0.424
Beta in relation to Nasdaq (XNAS):
1.389
Beta in relation to all global stocks::
1.074
Beta Comparison & Analysis
Beta of competitors/peers::
1.348
Beta is 52.57% higher than peers
Average Industry Beta:
1.197
Beta is 71.84% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
68.82%
Sustainable growth rate is 50.65% above industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.320
Alpha is 1984.91% above industry average alpha yield
Alpha is 2037% higher than market/& is unsustainably high
Analysis of Cost of Capital of
EXTR
Equity cost of capital:
0.172
Equity cost of capital is 51.90% above industry mean WACC
Unlevered (without debt) cost of capital:
3.55%
Before-tax cost of debt:
3.85%
After-tax cost of debt:
3.04%
Overall debt rating:
Lower BB medium grade (Fifth highest grade)
Weighted average cost of capital (WACC):
3.04%
WACC is 41.53% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$8.48
Revenue growth rate per share of (3Y):
25.61
Annual revenue growth rate is -138.56% below industry average
EPS:
$0.36
Expected Annual growth rate of EPS (3Y):
0.00%
-
Free cash flow (FCF) per share:
$0.81
-
-
Debt per share
$2.49
EBITDA per share
$0.88
Valuation Analysis Today of
EXTR
P/E Ratio:
42.52
P/E Ratio of Competitors/Peers:
25.03
P/E ratio is 69.91% higher than main peers & is 14.54% higher than the industry
Stock price/value with industry average P/E ratio: $13.36
EXTR is 5.65% overvalued if valued using industry average P/E ratio
-
-
P/S (Price to Sales ratio):
1.67
Price to sales ratio is -27.28% below the industry mean
P/B (Price to book value ratio):
25.61
Price to free cash flow: 17.51
Price to free cash flow ratio is -67.45% lower than the industry
Net income growth rate (3Y):
-103.81%
Net income growth rate is -122.77% lower than the industry average net income growth rate
Dividend Analysis
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Dividend History:
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
-
In-depth Debt & Leverage Analysis
Debt to equity ratio:
450.91%
Net debt to equity ratio:
248.01%
Debt to assets ratio:
32.33%
Net debt to assets ratio:
17.78%
Debt-to-asset ratio is -41.58% below industry average
Ability to repay debt:
Interest coverage ratio:
8.11
Interest coverage ratio is -77.75% less than industry average
Looking forward:
Debt growth rate:
-9.17%
Annual debt growth is -10% lower than industry average debt growth rate
Debt repayment rate in last quarter: 4.89%
Analysis of Key Statistics
Correlation of price movement with the market:
0.595
Statistical significance of correlation:
EXTR has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.552
Stock price is 7.74% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.552
Correlation of price movement with Nasdaq (^IXIC):
0.032
Covariance of price movement with the market:
0.082
Kurtosis
7.341
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
0.174
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
EXTR
Gross Profit Margin Ratio:
229%
Operating Profit Margin Ratio:
6.41%
Operating profit margin is -0.29% lower than the industry
Net Profit Margin Ratio:
229%
Effective Tax Rate:
14.57%
Effective tax rate is -47.78% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
68.01%
Return on equity (ROE) is 95.80% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
4.88%
Return on assets (ROA) is 11.65% higher than the industry
Financial Leverage:
1.5x
Current Ratio:
0.93
Current ratio is -58.11% below industry average
Cash Conversion Cycle (days):
5.3
Cash conversion cycle is -91.59% below industry average
The remaining useful life of property plant & equipment is: 31.5 years
Stock based compensation to net income ratio:
21.23%
In-depth Efficiency Analysis
Revenue generated per employee:
420.8K
Each employee generates -24% less revenue than industry average revenue per employee
EBITDA generated per employee:
43.8K
Each employee generates -42% less EBITDA than industry average revenue per employee
Profit generated per employee:
18.6K
Each employee generates -25% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
13.9K
Each employee generates -984% less free cash flow than industry average revenue per employee
Assets/Capital per employee
221.2K
Each employee generates -984% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
Research & development (R&D) investment growth rate-- -6.02%
Growth rate in R&D investment/expenditure is 160.02% higher than the industry
Competitors/Peer firms of
EXTR
FORMULA SYSTEMS (1985) LTD (XNAS:FORTY)
CAMTEK LTD (XNAS:CAMT)
Sapiens International Corporation N.V. (XNAS:SPNS)
IROBOT CORPORATION (XNAS:IRBT)
ARRAY TECHNOLOGIES, INC. (XNAS:ARRY)
INFINERA CORPORATION (XNAS:INFN)
CANADIAN SOLAR INC (XNAS:CSIQ)
XPERI HOLDING CORPORATION (XNAS:XPER)
COHU, INC. (XNAS:COHU)
Current Analyst Ratings
Strong buy�4%
Buy�8%
Hold�4%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Buy
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
1.11B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
475.37M
636.85M
194.84M
69.95M
358.77M
288.82M
4.00M
557.61M
373.00K
14.28M
44.01M
115.87M
71.30M
49.19M
57.58M
8.39M
49.19M
Statement of Cash Flow
Date:
Period:
11.60M
Differed Income Tax :
682.00K
Stock Based Compensation :
10.44M
Change in Working Capital :
- 229.00K
Accounts Receivables:
28.28M
Other Working Capital:
- 14860.00K
Other Non-Cash Items:
5.07M
Net Cash Provided by Operating Activities:
40.25M
Investments in PP&E:
-
Net Acquisitions:
- 69517.00K
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
9/30/21
2022
Q1
191.35M
-
191.35M
129.61M
32.44M
70.77M
424.17M
86.70M
387.81M
45.90M
-
-
64.23M
584.63M
-
1.01B
63.39M
44.60M
-
216.81M
130.26M
455.06M
326.12M
12.09M
481.42M
-
936.48M
136.00K
- 965647.00K
- 3722.0K
1.04B
September 30, 2021 at 6:00:00 AM
1.03B
72.33M
1.01B
-
370.72M
179.4M
-
- 3410.00K
- 72927.00K
- 16750.00K
- 4372.00K
-
-
- 1559.00K
- 22681.00K
- 191.00K
- 55545.00K
191.35M
246.89M
40.25M
- 3410.00K
36.84M
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
EXTR
2023
2024
2025
2026
2027
$16.12
$18.35
$20.89
$23.78
$27.06