ARUN  Aruba Networks Inc.

Exchange

NASDAQ

Sector

Technology

Industry

Computer peripheral equipment

Market Cap.

2.67B

Vuru Grade

45.50/100

Current Price

$24.64
+0.00 (+0.00%)

Growth Price

$8.44
Overvalued by 65.73%

Stability Price

$7.23
Overvalued by 70.67%

Company Metrics

  • P/E 303.62
  • P/S 3.29
  • P/B 8.48
  • EPS -0.02
  • Cash ROIC 124.88%
  • Cash Ratio 1.19
  • Dividend 0 / 0%
  • Avg. Vol. 4.03M
  • Shares 108.36M
  • Market Cap. 2.67B

Company Description

Aruba Networks, Inc. provides distributed enterprise networks that securely connect local and remote users to corporate information technology resources worldwide. Its product line comprises ArubaOS that integrates user based security, application-aware RF services, and wireless LAN access to deliver the mobile networking solution for large and mid-sized enterprises; software modules for ArubaOS; ... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Earnings Preview: Aruba Networks
Seeking Alpha - Aug 16, 2012
Aruba Networks, Inc. (NASDAQ:ARUN) is scheduled to report its Q4 2012 results on August 23, 2012, after the bell. The street expects EPS and revenue of $0.17 and $136.84M, respectively.
HP in Talks to Buy Aruba Networks for Wi-Fi Infrastructure
Bloomberg - Feb 25, 2015
Hewlett-Packard Co. is in talks to acquire Aruba Networks Inc., a maker of wireless-network infrastructure used by hotels, universities and shopping malls, people with knowledge of the matter said.
Hewlett-Packard Company To Acquire Aruba Networks, Inc. - Bidness ETC
HP to Buy Aruba Networks for $2.7 Billion
Wall Street Journal - Mar 2, 2015
Hewlett-Packard Co. agreed to acquire wireless-networking company Aruba Networks Inc. in a deal valued at roughly $2.7 billion, expanding H-P's capabilities in the mobile market.
HP buys Aruba Networks for $2.7 billion - Los Angeles Times
Hewlett-Packard confirms $2.7 billion deal for Aruba Networks, which has ... - OregonLive.com
Why HP Needs to Make its $3 Billion Aruba Networks Deal Worthwhile
Motley Fool - Mar 17, 2015
The company announced that it's agreed to buy wireless networking specialist Aruba Networks (NASDAQ:ARUN) for a total of around $3 billion.
Aruba Networks says Portland office is prototype for new Silicon Valley campus
OregonLive.com - Apr 22, 2015
The mobile networking company designed its new Portland office as a showcase for its wireless technology, a demonstration site for how an office can work without phone lines and wired Internet connections.
Cool Spaces: Visit an office of the future at Aruba's airy Portland space (Photos) - Portland Business Journal (blog)
Aruba Networks Replaces Cisco in Starbucks
Light Reading - Aug 29, 2013
Another community member, alexboone40, pointed out that Aruba Networks CEO Dominic Orr confirmed its partnership with Google on the company's fourth-quarter earnings call last Thursday.
Aruba Networks' value shoots to $2.4 billion on reports of HP buyout
Silicon Valley Business Journal - Feb 25, 2015
Stock for Sunnyvale-based Aruba Networks Inc. shot up 21 percent in after-hours trading after Bloomberg reported that Hewlett-Packard Co.
Hewlett-Packard's Aruba Networks Acquisition Makes Sense
Seeking Alpha (registration) - Mar 3, 2015
HPQ announced Monday that it had agreed to acquire wireless networking solutions provider Aruba Networks for around $2.7 billion in an all-cash deal.
Aruba CEO Orr: HP Deal Will Be Good for Company, Users - eWeek
HP to Pay $3 Billion to Acquire Aruba Networks - India West
Aruba Networks Delivers Secure Wi-Fi Infrastructure Protecting Thousands of ...
Business Wire (press release) - Aug 15, 2014
BUSINESS WIRE)--Aruba Networks, Inc. (NASDAQ:ARUN) successfully designed, deployed and operated a secure wireless LAN (WLAN) for the Black Hat USA 2014 Conference held in Las Vegas, August 2-7, protecting thousands of attendees' laptops and ...
Aruba Networks targets SME market, expands Aruba PartnerEdge
TechTarget - Oct 17, 2014
Having already experienced growth in the SME market with its Aruba Central cloud management solution and Instant controller-less access, Aruba said its recently announced 200 series -- a set of introductory level dual radio APs -- and the 210 Series AP ...
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for ARUN to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate ARUN's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$24.64 Current Price

$8.44 Growth Price (DCF)

Overvalued by 65.73%


Growth Rate Assumed by Market: 33.62%


Future Free Cash Flow Growth Rate: 0.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$7.23 Stability Price (EPV)

Overvalued by 70.67%


Discount Rate: 15.0%

$1.72 NCA Price

Overvalued by 93.02%

$18.25 Book Price

Overvalued by 25.94%


Varying Cash Return on Invested Capital over the past 5 years

ARUN has efficiently invested its financial resources in buildings, projects, and equipment, resulting in strong returns. However, there is a substantial variation in their Cash ROIC from year-to-year. This company may have unreliable free cash flow or operates in a business where invested capital costs increase substantially on a sporadic basis. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

ARUN has created $124.88 of cash for every $100 invested.
Figures in USD. Fiscal year ends in July
20102011201220132014
Free Cash Flow 20.54M 48.08M 99.82M 132.56M 90.53M
divided by
Invested Capital 6.81M 126.96M 145.15M 101.99M 105.21M
Cash ROIC 301.76% 37.87% 68.77% 129.97% 86.05%

Very Poor Return on Equity over the past 5 years

ARUN has shown an inability to deliver results for shareholders. This could be due to poor management, ARUN operating in a highly competitive industry, or having a weak business in general.

ARUN has generated a $3.87 loss for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in July
20102011201220132014
Net Income -34.00M 70.69M -8.85M -31.61M -28.97M
divided by
Stockholders' Equity 150.66M 345.34M 466.89M 476.23M 332.50M
Return on Equity -22.57% 20.47% -1.90% -6.64% -8.71%

Good Business Performance over the past 10 years

It's likely ARUN has been unable to maintain profitability in tough economic times, making it a somewhat cyclical business. The other possibility is ARUN has expended significant capital on items such as property, plant and equipment in specific years. Look for correlations.

ARUN has created positive free cash flow for 7 or 8 of the past 10 years.
Figures in USD. Fiscal year ends in July
2005200620072008200920102011201220132014
Free Cash Flow -24.14M -15.61M -8.09M 2.89M 16.18M 20.54M 48.08M 99.82M 132.56M 90.53M

Strong Balance Sheet

ARUN is financially strong with Current Assets covering Total Liabilities. It's in a fairly liquid position and dependent on the amount and saleability of any inventory; it may have the financial security to survive an economic downturn.
Figures in USD. Fiscal year ends in July
2005200620072008200920102011201220132014
Cash 5.19M 9.26M 105.00M 101.73M 123.14M 155.42M 233.96M 346.23M 414.80M 284.95M
Current Assets 25.60M 33.77M 143.36M 153.57M 172.56M 222.41M 397.86M 513.44M 598.71M 483.51M
Total Assets 30.34M 38.02M 152.13M 188.80M 203.05M 250.71M 488.87M 648.90M 746.74M 629.66M
Current Liabilities 26.48M 44.24M 33.87M 50.47M 56.92M 88.48M 127.96M 157.51M 229.95M 239.50M
Total Liabilities 92.80M 111.02M 39.65M 57.93M 65.47M 100.05M 143.53M 182.01M 270.52M 297.16M
Stockholder' Equity -62.46M -73.00M 112.49M 130.88M 137.59M 150.66M 345.34M 466.89M 476.23M 332.50M
Current Ratio 0.97 0.76 4.23 3.04 3.03 2.51 3.11 3.26 2.60 2.02
TL-to-TA 3.06 2.92 0.26 0.31 0.32 0.40 0.29 0.28 0.36 0.47

Low or No Reinvestment of Profits over the past 10 years

ARUN has either been retaining a small amount of their earnings or has done so inconsistently. A lack of consistency could be due to ARUN operating at a loss or them having such a strong economic moat they feel comfortable spending profits on growth. Be wary of future prospects and if applicable, inspect the moat's sustainability.
Figures in USD. Fiscal year ends in July
2005200620072008200920102011201220132014
Retained Earnings -2.59M -2.36M -101.10M -118.22M -141.63M -175.63M -104.94M -113.79M -145.40M -174.37M
Retained Earnings Growth - 8.58% -4,176.44% -16.94% -19.80% -24.00% 40.25% -8.43% -27.78% -19.92%

Erratic Net Profit Margins over the past 10 years

ARUN has had highly erratic net profit margins which are a great cause for concern. This company may operate in a highly volatile industry, or it may just have poor performance. Look at reasons for this inconsistency to understand if there is any reason to look past it.
Figures in USD. Fiscal year ends in July
2005200620072008200920102011201220132014
Net Income -32.64M -12.08M -24.38M -17.12M -23.41M -34.00M 70.69M -8.85M -31.61M -28.97M
divided by
Revenue 12.40M 72.50M 127.50M 178.26M 199.26M 266.53M 396.51M 516.77M 600.04M 728.93M
Net Profit Margin -263.12% -16.65% -19.12% -9.61% -11.75% -12.76% 17.83% -1.71% -5.27% -3.97%

Strong Pricing Power over the past 10 years

ARUN has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. This potentially leaves flexibility in inflationary environments to raise prices on consumers and maintain profitability.

$63.27 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in July
2005200620072008200920102011201220132014
Gross Profit 3.33M 42.62M 84.13M 121.15M 131.42M 180.46M 273.81M 365.33M 423.57M 504.15M
divided by
Revenue 12.40M 72.50M 127.50M 178.26M 199.26M 266.53M 396.51M 516.77M 600.04M 728.93M
Gross Margin 26.82% 58.78% 65.99% 67.96% 65.96% 67.71% 69.05% 70.70% 70.59% 69.16%

Low Capital Intensity over the past 10 years

ARUN has consistently used a small portion of their Net Income buying new equipment or investing in new facilities. This indicates that ARUN may require minimal investment to stay competitive. This leaves them with extra money to spend on growing their business and potentially buying back stock.

14.02% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in July
2005200620072008200920102011201220132014
Capital Expenditure 1.33M 2.09M 3.74M 5.41M 4.41M 5.30M 9.91M 13.04M 20.66M 22.17M
divided by
Net Income -32.64M -12.08M -24.38M -17.12M -23.41M -34.00M 70.69M -8.85M -31.61M -28.97M
Capital Expenditure Ratio -4.08% -17.33% -15.33% -31.58% -18.81% -15.59% 14.02% -147.37% -65.35% -76.53%

No Dividend History over the past 10 years

ARUN has never distributed dividends or has recently suspended their dividend distribution.
Figures in USD. Fiscal year ends in July
2005200620072008200920102011201220132014
Dividend Paid - - - - - - - - - -
divided by
Shares Outstanding 7.00M 11.21M 34.81M 79.47M 84.61M 89.98M 117.12M 108.77M 113.28M 108.44M
Dividend Paid Per Share - - - - - - - - - -
Price at Year End - - 14.95 2.45 10.91 21.28 18.52 20.27 17.77 18.38
Dividend Yield - - - - - - - - - -

History of Stock Buybacks over the past 10 years

ARUN has some history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in July
2005200620072008200920102011201220132014
Shares Outstanding 7.00M 11.21M 34.81M 79.47M 84.61M 89.98M 117.12M 108.77M 113.28M 108.44M
Stock Bought Back - -37.57% -67.79% -56.20% -6.08% -5.96% -23.17% 7.67% -3.98% 4.46%
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