CAVM  Cavium Networks Inc.

Exchange

NASDAQ

Sector

Technology

Industry

Semiconductors

Market Cap.

4.49B

Vuru Grade

38.46/100

Current Price

$67.05
+0.52 (+0.78%)

Growth Price

$9.67
Overvalued by 85.58%

Stability Price

$8.46
Overvalued by 87.38%

Company Metrics

  • P/E 1165.85
  • P/S 9.32
  • P/B 5.28
  • EPS -0.47
  • Cash ROIC 11.40%
  • Cash Ratio 2.11
  • Dividend 0 / 0%
  • Avg. Vol. 927,176.00
  • Shares 55.59M
  • Market Cap. 4.49B

Company Description

Cavium, Inc. designs, develops, and markets semiconductor processors for intelligent and secure networks. Its semiconductor products enable customers to develop networking, wireless, storage, and electronic equipment that are application-aware and content-aware, and securely process voice, video, and data traffic. The company's products also include a suite of embedded security protocols, which en... more


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

News

The Aperio Group LLC Invests $433000 in Cavium, Inc. (CAVM)
DailyQuint - 3 hours ago
Aperio Group LLC bought a new position in Cavium, Inc. (NASDAQ:CAVM) during the third quarter, Holdings Channel reports.
Nicholas Co. Inc. WI Has $4806000 Position in Cavium, Inc. (CAVM)
The Cerbat Gem - Feb 17, 2017
Cavium logo Nicholas Co. Inc. WI increased its stake in shares of Cavium, Inc. (NASDAQ:CAVM) by 0.9% during the fourth quarter, according to its most recent filing with the Securities and Exchange Commission.
Short Interest in Cavium, Inc. (CAVM) Decreases By 15.1% - Chaffey Breeze
Zacks Investment Research Downgrades Cavium, Inc. (CAVM) to Hold - Sports Perspectives
Cavium, Inc. (CAVM) PT Raised to $69.00 at Jefferies Group LLC
Sports Perspectives - Feb 6, 2017
Cavium logo Cavium, Inc. (NASDAQ:CAVM) had its price target upped by equities researchers at Jefferies Group LLC from $60.00 to $69.00 in a research report issued on Thursday.
Revenue Update on Cavium Inc(NASDAQ:CAVM) - Trade Calls
The Cavium, Inc. (CAVM) Scheduled to Post Quarterly Earnings on Wednesday - DailyQuint
Cavium Inc. (CAVM) Breaks into New 52-Week High on January 30 Session
Equities.com - Jan 30, 2017
Shares of Cavium Inc. (CAVM) broke into a new 52-week high yesterday, hitting a peak of $66.42. Shares closed at $66.15 after opening at $65.25 for a move of 1.32%.
Cavium Inc. (CAVM) Moves Higher on Volume Spike for February 03
Equities.com - Feb 3, 2017
Cavium Inc. (CAVM) traded on unusually high volume on Feb. 03, as the stock gained 1.29% to close at $66.95. On the day, Cavium Inc. saw 1.14 million shares trade hands on 8,647 trades. Considering that the stock averages only a daily volume of 737,900 ...
Digging Up the Facts on Cavium, Inc. (CAVM) - StockNewsJournal
Cavium, Inc. (CAVM) Price Target Raised to $69.00 at Jefferies Group LLC - Community Financial News
Cavium to Demonstrate Newest Infrastructure Security Solutions at RSA 2017
PR Newswire (press release) - Feb 13, 2017
SAN JOSE, Calif., Feb. 13, 2017 /PRNewswire/ -- Cavium, Inc. (NASDAQ: CAVM), a leading provider of products that enable secure and intelligent processing for enterprise, data center, cloud, wired and wireless networking, will demonstrate the company's ...
Cavium, Inc. (CAVM) Given Average Rating of “Buy” by Brokerages
Sports Perspectives - Jan 28, 2017
Cavium logo Cavium, Inc. (NASDAQ:CAVM) has been given a consensus rating of “Buy” by the twenty-one analysts that are currently covering the company.
Cavium Inc (CAVM) is Upgraded by BofA/Merrill to ” Buy”
Highland Mirror - Feb 16, 2017
Cavium Inc (CAVM) was Upgraded by BofA/Merrill to ” Buy” and the brokerage firm has set the Price Target at $85. Earlier the firm had a rating of “Neutral ” on the company shares.
Cavium, Inc. (CAVM) Raised to “Buy” at Bank of America Corporation - Sports Perspectives
Cavium, Inc. (CAVM) Lifted to Buy at Bank of America Corporation - BBNS
Form 4 CAVIUM, INC. For: Feb 10 Filed by: Hussain Muhammad Raghib
StreetInsider.com - Feb 14, 2017
Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b). 1. Name and Address of Reporting Person *. Hussain Muhammad Raghib. (Last), (First), (Middle). C/O CAVIUM, INC. 2315 N. FIRST STREET ...
Irving Magee Investment Management Invests $2835000 in Cavium, Inc. (CAVM)
The Cerbat Gem - Feb 10, 2017
Cavium logo Irving Magee Investment Management acquired a new stake in Cavium, Inc. (NASDAQ:CAVM) during the third quarter, according to its most recent disclosure with the Securities and Exchange Commission (SEC).
Empyrean Capital Partners LP Acquires New Stake in Cavium, Inc. (CAVM) - Sports Perspectives
The Jefferies Group LLC Raises Cavium, Inc. (CAVM) Price Target to $69.00 - DailyQuint
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for CAVM 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 CAVM'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.

$67.05 Current Price

$9.67 Growth Price (DCF)

Overvalued by 85.58%


Growth Rate Assumed by Market: 85.39%


Future Free Cash Flow Growth Rate: 15.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$8.46 Stability Price (EPV)

Overvalued by 87.38%


Discount Rate: 15.0%

$3.25 NCA Price

Overvalued by 95.16%

$41.97 Book Price

Overvalued by 37.41%


Inconsistent Cash Return on Invested Capital over the past 5 years

CAVM has somewhat efficiently invested its financial resources in buildings, projects, and equipment. However, there has been some inconsistency from year-to-year. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

CAVM has created $11.40 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20112012201320142015
Free Cash Flow 7.16M 10.21M 43.20M 35.70M 15.58M
divided by
Invested Capital 256.90M 199.50M 167.64M 213.63M 235.49M
Cash ROIC 2.79% 5.12% 25.77% 16.71% 6.62%

Very Poor Return on Equity over the past 5 years

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

CAVM has generated a $12.86 loss for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20112012201320142015
Net Income 33,000.00 -113.66M -13.69M -25.82M -17.06M
divided by
Stockholders' Equity 310.69M 244.09M 286.58M 316.68M 353.90M
Return on Equity 0.01% -46.57% -4.78% -8.15% -4.82%

Good Business Performance over the past 10 years

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

CAVM has created positive free cash flow for 7 or 8 of the past 10 years.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Free Cash Flow -9.89M 404,000.00 1.33M -3.81M 26.06M 7.16M 10.21M 43.20M 35.70M 15.58M

Very Strong Balance Sheet

CAVM has more Cash than its Total Liabilities, resulting in $0.98 Net Cash per share. In other words, if you buy CAVM today, the price you're paying for shares is actually $66.07 because $0.98 of Cash is included in the current share price. This much Cash is very healthy. It can help CAVM sustain itself in the face of any economic turmoil and makes a stock buyback more of a possibility.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Cash 10.15M 98.46M 77.03M 58.92M 90.67M 63.23M 76.78M 127.76M 131.72M 134.65M
Current Assets 22.81M 118.75M 109.66M 101.01M 163.62M 151.56M 164.90M 223.66M 240.97M 260.63M
Total Assets 29.96M 134.61M 151.16M 199.80M 291.62M 360.26M 331.50M 367.99M 408.86M 433.99M
Current Liabilities 11.12M 13.70M 19.33M 35.11M 45.75M 40.14M 55.22M 72.59M 63.52M 63.86M
Total Liabilities 87.14M 17.76M 22.60M 43.42M 57.01M 49.56M 87.41M 81.40M 92.18M 80.09M
Stockholder' Equity -57.18M 116.85M 128.56M 156.37M 234.61M 310.69M 244.09M 286.58M 316.68M 353.90M
Current Ratio 2.05 8.67 5.67 2.88 3.58 3.78 2.99 3.08 3.79 4.08
TL-to-TA 2.91 0.13 0.15 0.22 0.20 0.14 0.26 0.22 0.23 0.18

Low or No Reinvestment of Profits over the past 10 years

CAVM has either been retaining a small amount of their earnings or has done so inconsistently. A lack of consistency could be due to CAVM 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 December
2006200720082009201020112012201320142015
Retained Earnings -60.92M -58.73M -57.22M -78.62M -41.49M -41.46M -154.09M -157.06M -172.35M -189.41M
Retained Earnings Growth - 3.59% 2.57% -37.39% 47.22% 0.08% -271.66% -1.92% -9.74% -9.90%

Loss Making Entity over the past 10 years

CAVM has been unable to maintain profitability. It's Costs of Sales have outstripped Revenue consistently. This is a huge red flag, unless the company has been investing heavily for the future. However, even that is dubious since accurately predicting the future of a company like that is extremely difficult.

$8.75 of every $100 of Revenue have been a loss, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Net Income -8.99M 2.19M 1.51M -21.39M 37.12M 33,000.00 -113.66M -13.69M -25.82M -17.06M
divided by
Revenue 34.21M 54.20M 86.61M 101.21M 206.50M 259.21M 235.48M 303.99M 372.98M 412.74M
Net Profit Margin -26.27% 4.04% 1.74% -21.14% 17.98% 0.01% -48.27% -4.50% -6.92% -4.13%

Strong Pricing Power over the past 10 years

CAVM 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.

$60.61 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Gross Profit 21.11M 34.31M 50.97M 50.10M 127.01M 167.01M 132.88M 189.31M 234.62M 268.98M
divided by
Revenue 34.21M 54.20M 86.61M 101.21M 206.50M 259.21M 235.48M 303.99M 372.98M 412.74M
Gross Margin 61.72% 63.29% 58.85% 49.50% 61.51% 64.43% 56.43% 62.28% 62.90% 65.17%

High Capital Intensity over the past 10 years

CAVM spends large amounts of capital buying new equipment or investing in new facilities to stay competitive. Over the long term, those costs may have to be fuelled by debt. Look at the growth of Shareholders' Equity to see if this strategy is having a positive or negative impact.

14,235.32% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Capital Expenditure 2.08M 5.77M 9.30M 3.43M 6.85M 18.49M 18.08M 12.64M 24.91M 42.27M
divided by
Net Income -8.99M 2.19M 1.51M -21.39M 37.12M 33,000.00 -113.66M -13.69M -25.82M -17.06M
Capital Expenditure Ratio -23.09% 263.56% 616.85% -16.04% 18.44% 56,042.42% -15.91% -92.34% -96.51% -247.75%

No Dividend History over the past 10 years

CAVM has never distributed dividends or has recently suspended their dividend distribution.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Dividend Paid - - - - - - - - - -
divided by
Shares Outstanding 8.07M 32.43M 42.57M 41.44M 48.24M 50.77M 49.89M 51.60M 53.45M 55.59M
Dividend Paid Per Share - - - - - - - - - -
Price at Year End - 23.51 10.15 24.41 38.42 28.43 30.69 33.34 61.55 66.63
Dividend Yield - - - - - - - - - -

History of Stock Buybacks over the past 10 years

CAVM 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 December
2006200720082009201020112012201320142015
Shares Outstanding 8.07M 32.43M 42.57M 41.44M 48.24M 50.77M 49.89M 51.60M 53.45M 55.59M
Stock Bought Back - -75.13% -23.81% 2.73% -14.10% -4.99% 1.77% -3.31% -3.47% -3.85%
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