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A Look at NetApp’s Valuation Metrics

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Aug. 10 2018, Updated 9:01 a.m. ET

Valuation ratios

NetApp (NTAP) has an expected market cap-to-revenue ratio of 3.45x for fiscal 2019 and 3.29x for 2020. The company’s EV-to-revenue (enterprise value-to-revenue) ratio is expected to be 3.03x in 2019 and 2.96x in 2020, while its EV-to-EBITDA ratio is expected to be 13.0x in 2019 and 12.0x in 2020.

The company’s estimated price-to-book ratio is expected to be 11.2x in 2019 and 10.6x in 2020. NetApp’s PE ratio is expected to be 24.3x in 2019 and 20.7x in 2020.

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Profitability

Analysts expect NetApp’s operating margin to be 20.5% in 2019 and to expand to 21.8% in 2020. Its net margin is expected to be 14.6% in 2019 and 15.9% in 2020. Its return on assets is expected to be 10% in 2019 and 10.7% in 2020, and its return on equity is expected to be 51.1% in 2019 and 69.2% in 2020.

Balance sheet analysis

NetApp’s ratio of capex to current assets is expected to be 2.9% in 2019 and 2.8% in 2020. Its cash flow-to-sales ratio is expected to be 22.1% in 2019, and it could rise to 23.3% in 2020.

Dividend yield

NetApp has a dividend yield of 1.9%, indicating an annualized payout of $1.60 per share and a payout ratio of 45.3%. The dividend yields of storage peers Western Digital (WDC), IBM (IBM), Seagate (STX), and Hewlett Packard Enterprise (HPE) are 3%, 4.3%, 4.8%, and 2.8%, respectively.

NetApp has increased its dividend at a compound annual growth rate of 7.4% over the last three years.

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