CAVM  Cavium Networks Inc.

Exchange

NASDAQ

Sector

Technology

Industry

Semiconductors

Market Cap.

4.33B

Vuru Grade

23.50/100

Current Price

$63.73
-2.78 (-4.18%)

Growth Price

$5.29
Overvalued by 91.70%

Company Metrics

  • P/E 1165.85
  • P/S 6.18
  • P/B 6.28
  • EPS -3.05
  • Cash ROIC 10.28%
  • Cash Ratio 1.32
  • Dividend 0 / N/A %
  • Avg. Vol. 803,642.00
  • Shares 60.88M
  • Market Cap. 4.33B

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

Cavium and China Unicom Announce Trials of M-CORD NFV/5G Platforms in China
PR Newswire (press release) - 7 hours ago
SAN JOSE, Calif. and SHANGHAI, June 27, 2017 /PRNewswire/ -- Cavium, Inc. (NASDAQ: CAVM), a leading provider of semiconductor products that enable secure and intelligent processing for enterprise, data center, wired and wireless networking, and ...
Cavium Expands the ThunderX2 Server Ecosystem for Cloud and HPC Applications
PR Newswire (press release) - Jun 19, 2017
FRANKFURT, Germany and SAN JOSE, Calif., June 19, 2017 /PRNewswire/ -- Cavium, Inc. (NASDAQ: CAVM), a leading provider of semiconductor products that enable secure and intelligent processing for enterprise, datacenter, cloud, wired and wireless ...
Cavium to Showcase ThunderX-based Server Platforms, Software at ISC17 - HPCwire (blog)
Penguin Computing Announces Its Next-Generation Tundra Open Compute Servers ... - GuruFocus.com
These two stocks are dominating the market, As Expected: Cavium, Inc. (CAVM ...
StockNewsJournal - 20 hours ago
Cavium, Inc. (NASDAQ:CAVM) market capitalization at present is $4.52B at the rate of $66.51 a share. The firm's price-to-sales ratio was noted 6.20 in contrast with an overall industry average of 21.30.
Cavium and Partners to Demonstrate a Range of Efficient, Secure and Scalable ...
PR Newswire (press release) - May 29, 2017
TAIPEI, Taiwan and SAN JOSE, Calif., May 29, 2017 /PRNewswire/ -- COMPUTEX - Cavium, Inc. (NASDAQ: CAVM), a leading provider of semiconductor products that enable secure and intelligent processing for enterprise, datacenter, cloud, wired and ...
Inventec Launches New Baymax™ HyperScale Server Platforms Powered by Cavium ... - Stockhouse
Cavium Inc (NASDAQ:CAVM) Q4 2016 Sentiment Report
Weekly Register - 15 hours ago
Cavium Inc (NASDAQ:CAVM) institutional sentiment decreased to 0.93 in 2016 Q4. Its down -0.89, from 1.82 in 2016Q3. The ratio fall, as 99 hedge funds started new and increased holdings, while 106 cut down and sold positions in Cavium Inc. The hedge ...
Notable Two Hundred Day Moving Average Cross - CAVM - Nasdaq
Pacific Crest Reaffirms Equal Weight Rating for Cavium, Inc. (CAVM) - The Cerbat Gem
Initiating Research Reports on Semiconductor Equities -- Cavium, FormFactor ...
PR Newswire (press release) - Jun 27, 2017
DailyStockTracker.com turns investors' attention to the following Semiconductor Broad Line stocks for today: Cavium Inc. (NASDAQ: CAVM), FormFactor Inc. (NASDAQ: FORM), Kopin Corp. (NASDAQ: KOPN), and Mellanox Technologies Ltd (NASDAQ: ...
Today's Brokerage Rating: Cavium, Inc. (CAVM), Electronic Arts Inc. (EA)
StockNewsJournal - Jun 26, 2017
Cavium, Inc. (CAVM) have shown a high EPS growth of 42.90% in the last 5 years and has earnings decline of -687.80% yoy.
The Cavium, Inc. (CAVM) Stake Raised by RPG Investment Advisory LLC - BangaloreWeekly
TCW Group Inc. Has $12.16 Million Stake in Cavium, Inc. (CAVM) - Stock Observer
Cavium, Inc. (NasdaqGS:CAVM): How Does This Stock Score in Terms of Value?
Union Trade Journal - 9 hours ago
Cavium, Inc. (NasdaqGS:CAVM) currently has a Value Composite score of 78. The Value Composite One (VC1) is a method that investors use to determine a company's value.
Risk Malaise Alert in Option Market: Cavium Inc Implied Price Swing Hits A ...
CML News - Jun 24, 2017
Before we dive into any analysis we simply note that Cavium Inc (NASDAQ:CAVM) risk is actually priced pretty low by the option market as of right now.
Cavium, Inc. (CAVM) is ShearLink Capital LLC's 2nd Largest Position
The Cerbat Gem - Jun 24, 2017
Cavium logo ShearLink Capital LLC cut its position in shares of Cavium, Inc. (NASDAQ:CAVM) by 34.9% during the first quarter, according to its most recent filing with the SEC.
Analysts See $0.34 EPS for Cavium Inc (CAVM) - WeeklyHub
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.

$63.73 Current Price

$5.29 Growth Price (DCF)

Overvalued by 91.70%


Growth Rate Assumed by Market: 500.00%


Future Free Cash Flow Growth Rate: 15.0%


Discount Rate: 15.0%


CAVM's most recent year of (normalized) free cash flow is negative. This is the base number for forward projections. This means that if you increase the growth rate, the amount of negative FCF grows, thereby decreasing the price.

Show Free Cash Flow numbers

$88.23 Book Price

Undervalued by 38.45%


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 $10.28 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20122013201420152016
Free Cash Flow 10.21M 43.20M 35.70M 15.58M -35.60M
divided by
Invested Capital 199.50M 167.64M 213.63M 235.49M 1.26B
Cash ROIC 5.12% 25.77% 16.71% 6.62% -2.82%

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 $16.83 loss for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20122013201420152016
Net Income -113.66M -13.69M -25.82M -17.06M -147.21M
divided by
Stockholders' Equity 244.09M 286.58M 316.68M 353.90M 741.84M
Return on Equity -46.57% -4.78% -8.15% -4.82% -19.84%

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
2007200820092010201120122013201420152016
Free Cash Flow 404,000.00 1.33M -3.81M 26.06M 7.16M 10.21M 43.20M 35.70M 15.58M -35.60M

Weak Balance Sheet

CAVM's financial position is not ideal. The key is to check whether CAVM is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Cash 98.46M 77.03M 58.92M 90.67M 63.23M 76.78M 127.76M 131.72M 134.65M 221.44M
Current Assets 118.75M 109.66M 101.01M 163.62M 151.56M 164.90M 223.66M 240.97M 260.63M 489.12M
Total Assets 134.61M 151.16M 199.80M 291.62M 360.26M 331.50M 367.99M 408.86M 433.99M 1.65B
Current Liabilities 13.70M 19.33M 35.11M 45.75M 40.14M 55.22M 72.59M 63.52M 63.86M 168.24M
Total Liabilities 17.76M 22.60M 43.42M 57.01M 49.56M 87.41M 81.40M 92.18M 80.09M 908.69M
Stockholder' Equity 116.85M 128.56M 156.37M 234.61M 310.69M 244.09M 286.58M 316.68M 353.90M 741.84M
Current Ratio 8.67 5.67 2.88 3.58 3.78 2.99 3.08 3.79 4.08 2.91
TL-to-TA 0.13 0.15 0.22 0.20 0.14 0.26 0.22 0.23 0.18 0.55

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
2007200820092010201120122013201420152016
Retained Earnings -58.73M -57.22M -78.62M -41.49M -41.46M -154.09M -157.06M -172.35M -189.41M -336.62M
Retained Earnings Growth - 2.57% -37.39% 47.22% 0.08% -271.66% -1.92% -9.74% -9.90% -77.72%

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.

$8.56 of every $100 of Revenue have been a loss, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Net Income 2.19M 1.51M -21.39M 37.12M 33,000.00 -113.66M -13.69M -25.82M -17.06M -147.21M
divided by
Revenue 54.20M 86.61M 101.21M 206.50M 259.21M 235.48M 303.99M 372.98M 412.74M 603.31M
Net Profit Margin 4.04% 1.74% -21.14% 17.98% 0.01% -48.27% -4.50% -6.92% -4.13% -24.40%

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.

$59.16 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
2007200820092010201120122013201420152016
Gross Profit 34.31M 50.97M 50.10M 127.01M 167.01M 132.88M 189.31M 234.62M 268.98M 285.31M
divided by
Revenue 54.20M 86.61M 101.21M 206.50M 259.21M 235.48M 303.99M 372.98M 412.74M 603.31M
Gross Margin 63.29% 58.85% 49.50% 61.51% 64.43% 56.43% 62.28% 62.90% 65.17% 47.29%

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
2007200820092010201120122013201420152016
Capital Expenditure 5.77M 9.30M 3.43M 6.85M 18.49M 18.08M 12.64M 24.91M 42.27M 101.10M
divided by
Net Income 2.19M 1.51M -21.39M 37.12M 33,000.00 -113.66M -13.69M -25.82M -17.06M -147.21M
Capital Expenditure Ratio 263.56% 616.85% -16.04% 18.44% 56,042.42% -15.91% -92.34% -96.51% -247.75% -68.68%

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
2007200820092010201120122013201420152016
Dividend Paid - - - - - - - - - -
divided by
Shares Outstanding 32.43M 42.57M 41.44M 48.24M 50.77M 49.89M 51.60M 53.45M 55.59M 60.88M
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 62.44
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
2007200820092010201120122013201420152016
Shares Outstanding 32.43M 42.57M 41.44M 48.24M 50.77M 49.89M 51.60M 53.45M 55.59M 60.88M
Stock Bought Back - -23.81% 2.73% -14.10% -4.99% 1.77% -3.31% -3.47% -3.85% -8.70%
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