TSX:EXF

Stock Analysis Report

Executive Summary

EXFO Inc. provides test, monitoring and analytics solutions for fixed and mobile communications service providers, web-scale operators, and network equipment.

Rewards

Trading at 7.3% below its fair value

Earnings are forecast to grow 81.05% per year

Became profitable this year

Risk Analysis

No risks detected for EXF from our risk checks.


Snowflake Analysis

Excellent balance sheet with reasonable growth potential.


Similar Companies

Share Price & News

How has EXFO's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: EXF has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-2.2%

EXF

1.3%

CA Communications

-0.9%

CA Market


1 Year Return

22.9%

EXF

1.6%

CA Communications

8.3%

CA Market

Return vs Industry: EXF exceeded the Canadian Communications industry which returned -1.5% over the past year.

Return vs Market: EXF exceeded the Canadian Market which returned 10.4% over the past year.


Shareholder returns

EXFIndustryMarket
7 Day-2.2%1.3%-0.9%
30 Day-8.7%5.3%1.1%
90 Day-1.7%5.5%5.3%
1 Year22.9%22.9%2.2%1.6%11.7%8.3%
3 Year-31.2%-31.2%-9.1%-10.7%17.3%6.7%
5 Year23.8%23.8%-33.1%-35.2%33.3%13.9%

Price Volatility Vs. Market

How volatile is EXFO's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is EXFO undervalued compared to its fair value and its price relative to the market?

7.2%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: EXF (CA$5.21) is trading below our estimate of fair value (CA$5.62)

Significantly Below Fair Value: EXF is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: EXF is poor value based on its PE Ratio (44.9x) compared to the Communications industry average (40x).

PE vs Market: EXF is poor value based on its PE Ratio (44.9x) compared to the Canadian market (15.8x).


Price to Earnings Growth Ratio

PEG Ratio: EXF is good value based on its PEG Ratio (0.6x)


Price to Book Ratio

PB vs Industry: EXF is good value based on its PB Ratio (1.3x) compared to the CA Communications industry average (1.3x).


Next Steps

Future Growth

How is EXFO forecast to perform in the next 1 to 3 years based on estimates from 6 analysts?

81.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: EXF's forecast earnings growth (81% per year) is above the savings rate (1.4%).

Earnings vs Market: EXF's earnings (81% per year) are forecast to grow faster than the Canadian market (10.3% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: EXF's revenue (5.7% per year) is forecast to grow faster than the Canadian market (5% per year).

High Growth Revenue: EXF's revenue (5.7% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if EXF's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has EXFO performed over the past 5 years?

-50.0%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: EXF has high quality earnings.

Growing Profit Margin: EXF became profitable in the past.


Past Earnings Growth Analysis

Earnings Trend: EXF has become profitable over the past 5 years, growing earnings by -50% per year.

Accelerating Growth: EXF has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: EXF has become profitable in the last year, making it difficult to compare its past year earnings growth to the Communications industry (12.6%).


Return on Equity

High ROE: EXF's Return on Equity (2.8%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is EXFO's financial position?


Financial Position Analysis

Short Term Liabilities: EXF's short term assets ($126.6M) exceed its short term liabilities ($89.1M).

Long Term Liabilities: EXF's short term assets ($126.6M) exceed its long term liabilities ($24.9M).


Debt to Equity History and Analysis

Debt Level: EXF's debt to equity ratio (10.6%) is considered satisfactory.

Reducing Debt: Insufficient data to determine if EXF's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: EXF's debt is well covered by operating cash flow (72.1%).

Interest Coverage: EXF's interest payments on its debt are well covered by EBIT (5.6x coverage).


Balance Sheet

Inventory Level: EXF has a high level of physical assets or inventory.

Debt Coverage by Assets: EXF's debt is covered by short term assets (assets are 6.9x debt).


Next Steps

Dividend

What is EXFO's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

companyn/amarketbottom25%1.9%markettop25%5.5%industryaverage2.9%forecastin3Yearsn/a

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate EXF's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate EXF's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if EXF's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if EXF's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of EXF's dividend in 3 years as they are not forecast to pay a notable one for the Canadian market.


Next Steps

Management

What is the CEO of EXFO's salary, the management and board of directors tenure and is there insider trading?

13.6yrs

Average management tenure


CEO

Philippe Morin (53yo)

2.8yrs

Tenure

US$806,998

Compensation

Mr. Philippe Morin has been the Chief Executive Officer at EXFO Inc since April 1, 2017 and served as its Chief Operating Officer since November 9, 2015 until April 1,2017. Mr. Morin served as Senior Vice  ...


CEO Compensation Analysis

Compensation vs Market: Philippe's total compensation ($USD807.00K) is about average for companies of similar size in the Canadian market ($USD672.22K).

Compensation vs Earnings: Philippe's compensation has been consistent with company performance over the past year.


Management Age and Tenure

13.6yrs

Average Tenure

60yo

Average Age

Experienced Management: EXF's management team is seasoned and experienced (13.6 years average tenure).


Board Age and Tenure

5.5yrs

Average Tenure

61yo

Average Age

Experienced Board: EXF's board of directors are considered experienced (5.5 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

SellCA$60,15516 Oct 19
Stephen Bull
EntityIndividual
Role
Other Key Executive
Vice President of Research & Development
Shares12,268
Max PriceCA$4.90
SellCA$60,66206 May 19
Stephen Bull
EntityIndividual
Role
Other Key Executive
Vice President of Research & Development
Shares10,000
Max PriceCA$6.15
SellCA$43,18026 Apr 19
Pierre Plamondon
EntityIndividual
Role
Chief Financial Officer
CFO & VP of Finance
Shares7,300
Max PriceCA$5.95
SellCA$62,51818 Apr 19
Pierre Plamondon
EntityIndividual
Role
Chief Financial Officer
CFO & VP of Finance
Shares11,000
Max PriceCA$5.77
SellCA$97,65312 Apr 19
Pierre Plamondon
EntityIndividual
Role
Chief Financial Officer
CFO & VP of Finance
Shares17,274
Max PriceCA$5.68

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Stephen Bull (60yo)

    Vice President of Research & Development

    • Tenure: 20.1yrs
    • Compensation: US$364.79k
  • Germain Lamonde

    Founder & Executive Chairman

    • Tenure: 20yrs
    • Compensation: US$541.15k
  • Pierre Plamondon (61yo)

    CFO & VP of Finance

    • Tenure: 24yrs
    • Compensation: US$449.68k
  • Vikas Arora

    Chief Technology Officer

    • Tenure: 11.5yrs
  • Philippe Morin (53yo)

    CEO & Director

    • Tenure: 2.8yrs
    • Compensation: US$807.00k
  • Benoit Ringuette

    General Counsel & Corporate Secretary

    • Tenure: 15.8yrs
  • Vance Oliver

    Director of Investor Relations

    • Suzanne Daneau

      Vice President of Human Resources

      • Tenure: 0.3yrs

    Board Members

    • Germain Lamonde

      Founder & Executive Chairman

      • Tenure: 20yrs
      • Compensation: US$541.15k
    • Claude Séguin (69yo)

      Independent Director

      • Tenure: 6.9yrs
      • Compensation: US$65.30k
    • François Côté (61yo)

      Lead Director

      • Tenure: 4yrs
      • Compensation: US$69.07k
    • Philippe Morin (53yo)

      CEO & Director

      • Tenure: 2.8yrs
      • Compensation: US$807.00k
    • Randy Tornes

      Independent Director

      • Tenure: 6.9yrs
      • Compensation: US$79.00k
    • Angela Logothetis

      Independent Director

      • Tenure: 3yrs
      • Compensation: US$79.00k

    Company Information

    EXFO Inc.'s company bio, employee growth, exchange listings and data sources


    Key Information

    • Name: EXFO Inc.
    • Ticker: EXF
    • Exchange: TSX
    • Founded: 1985
    • Industry: Communications Equipment
    • Sector: Tech
    • Market Cap: CA$293.853m
    • Shares outstanding: 55.55m
    • Website: https://www.exfo.com

    Number of Employees


    Location

    • EXFO Inc.
    • 400 Godin Avenue
    • Québec City
    • Quebec
    • G1M 2K2
    • Canada

    Listings

    TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
    EXFONasdaqGS (Nasdaq Global Select)YesSubordinate Voting SharesUSUSDJun 2000
    EXFTSX (The Toronto Stock Exchange)YesSubordinate Voting SharesCACADJun 2000
    EEZDB (Deutsche Boerse AG)YesSubordinate Voting SharesDEEURJun 2000

    Biography

    EXFO Inc. provides test, monitoring and analytics solutions for fixed and mobile communications service providers, web-scale operators, and network equipment. It offers field network testing products, such as copper/DSL testing, dispersion analysis, fiber inspection, light sources, live fiber detection, network protocol testing, optical fiber multimeter, optical loss testing, optical time domain reflectometry and iOLM, power meters, spectral testing, test function virtualization, and test reporting and automation products, as well as modular test platforms. The company also provides lab and manufacturing testing network protocol testing products, network simulation and load testing products, optical benchtop kits, optical communication analyzers, optical light sources, optical power meters, optical spectrum analyzers, switch and utility modules, test platforms, variable attenuators, tunable filters, optical component testers, and tunable sources; and service assurance products, such as fiber monitoring, network probe, network topology management, monitoring and troubleshooting, RAN optimization, and real-time analytics. In addition, it offers mobile portfolio that consists of network simulators and optical radio frequency test solutions for turning up and troubleshooting fiber-based mobile networks; PC-centric and open-ended platforms with cloud-based software applications; and Internet protocol assurance services, as well as monitoring services for 2G, 3G, 4G/LTE, and 5G mobile networks. The company sells products through its direct sales force, sales representatives, and distributors in the Americas, Europe, the Middle-East, Africa, and the Asia-Pacific. EXFO Inc. was founded in 1985 and is headquartered in Québec City, Canada. 


    Company Analysis and Financial Data Status

    All financial data provided by Standard & Poor's Capital IQ.
    DataLast Updated (UTC time)
    Company Analysis2020/01/28 23:39
    End of Day Share Price2020/01/28 00:00
    Earnings2019/11/30
    Annual Earnings2019/08/31


    Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.