Why Has F5 Networks Stock Underperformed The S&P Since 2019?

FFIV: F5 logo

F5 Inc. (NASDAQ: FFIV) stock price rose just 17% from $139 in 2019 end to around $163 currently, primarily due to favorable changes in its sales. During this period, the company witnessed a stellar 43% jump in revenues, but its P/S multiple has dropped 22% over the same period. Additionally, over the same period, the S&P 500 returned a little over 20%, meaning that FFIV stock underperformed the broader markets since 2019.

In our interactive dashboard, Why F5 Networks Stock Moved: FFIV Stock Has Gained 17% Since 2019, we break down the factors behind this move.

(A) FFIV’s Total Revenue has grown 43% from $3.2 billion in FY 2019 to $4.6 billion on an LTM basis

  • FFIV’s total revenue increased from $3.2 billion in FY ’19 to $3.9 billion in FY ’21, and currently stands at around $4.6 billion on an LTM basis (FFIV’s fiscal year ends in September).
  • The sales growth has been consistent over these years and has been driven evenly by a growth in both, services and products revenues.
  • As of FY ’21, services sales make up around 52% of the company’s total sales, with products revenues making up the remaining 48%.
  • For additional details about FFIV’s revenues and comparison to peers, see F5 Networks (FFIV) Revenue Comparison
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(B) Revenue per share (RPS) increased 42% from $53.73 in 2019 to $76.52 currently

  • FFIV’s revenue rose from $3.2 billion in 2019 to $4.6 billion currently, while the outstanding share count increased marginally over this period.
  • Due to this, RPS has risen from $53.73 in FY ’19 to $76.52 currently.

(C) Price-To-Sales (P/S) multiple for FFIV rose strongly from 2.7x in 2019 to 4x by 2021 end, but has pulled back to 2.1x currently, lower than its 2019 level

  • FFIV’s P/S multiple rose strongly to around 4x by late 2021, on the back of rising investor expectations surrounding increased networking products and services demand.
  • However, due to the current geopolitical tensions and increased economic uncertainty weighing on the broader markets, the P/S multiple has pulled back strongly, currently standing at around 2.1x.
  • For additional details about the company stock returns and comparison to peers, see F5 Networks (FFIV) Stock Return Comparison.

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Returns May 2022
MTD [1]
YTD [1]
Total [2]
 FFIV Return 0% -31% 16%
 S&P 500 Return -3% -16% 79%
 Trefis Multi-Strategy Portfolio -5% -21% 215%

[1] Month-to-date and year-to-date as of 5/13/2022
[2] Cumulative total returns since the end of 2016


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