Here’s Why NetApp Stock Has Failed To Outperform The S&P
NetApp Inc. (NASDAQ: NTAP) stock price gained just 8% from $60 at 2018 end to almost $65 currently, primarily due to a slight rise in its P/S multiple. However, the company also witnessed a steady rise in its revenue per share, driven by a marginal rise in sales and a drop in its outstanding share count. The company’s stock massively underperformed the S&P 500, which grew around 1.5x during this period.
In our interactive dashboard, Why NetApp Stock Moved: NTAP Stock Has Gained 8% Since 2018, we break down the factors behind this move.
(A) NetApp’s Total Revenue has risen 2.8% from $6.1 billion in FY 2019 to $6.3 billion currently
- NetApp’s total revenue initially dropped from $6.1 billion in FY ’19 to $5.4 billion in FY ’20, before pulling back up to $6.3 billion in FY ’22 (NTAP’s fiscal year ends in April), and currently stands at the same level.
- As of FY ’22, NetApp’s sales come almost equally from its products (52%) and services (48%) divisions.
- However, just two years ago in FY ’20, sales from its services segment stood at 44%, and most of the sales growth since then has been driven by a rise in sales from services.
- For details about NetApp revenues and comparison to peers, see NetApp (NTAP) Revenue Comparison
- Up 45% This Year, Will Higher Flash Array Sales And Gen AI Drive NetApp Stock Higher?
- Up 27% Over The Past Year, Will Higher Margins And Cloud Sales Drive NetApp Stock Higher Post Q3 Earnings?
- Up 28% Since The Beginning Of 2023, What’s Next For NetApp Stock?
- What To Expect From NetApp’s Q4 Results?
- NetApp Stock Looks Attractive Despite Easing IT Spending
- Despite A Rise In Sales, Here’s Why NetApp Stock Has Underperformed The S&P
(B) Revenue per share (RPS) increased 17% from $24.18 in FY 2019 to $28.30 currently
- NetApp revenue rose from $6.1 billion in FY ’19 to $6.3 billion currently, while the outstanding share count dropped from 254.1 million in FY ’19 to 223.3 million currently.
- Due to this, RPS has risen steadily from $24.18 in FY ’19 to $28.30 currently.
(C) Price-To-Sales (P/S) multiple for NetApp has risen from 2.2x in 2019 to 3.5x by 2021 end, and currently stands at 2.3x, just marginally higher than its 2019 level
- NetApp’s P/S multiple jumped to around 3.5x by late 2020, on the back of rising investor expectations surrounding continued demand growth for its products and services.
- However, due to the current increased economic uncertainty weighing on the broader markets, the P/S multiple has pulled back, currently standing at around 2.3x.
- For additional details about the company’s stock returns and comparison to peers, see NetApp (NTAP) Stock Return Comparison.
What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.
| Returns | Jun 2022 MTD [1] |
2022 YTD [1] |
2017-22 Total [2] |
| NTAP Return | -10% | -30% | 83% |
| S&P 500 Return | 2% | -22% | 88% |
| Trefis Multi-Strategy Portfolio | -9% | -26% | 189% |
[1] Month-to-date and year-to-date as of 6/21/2022
[2] Cumulative total returns since the end of 2016
Invest with Trefis Market Beating Portfolios
See all Trefis Price Estimates