NasdaqGS:EXFO

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 5.2% below its fair value

Earnings are forecast to grow 81.05% per year

Became profitable this year

Risk Analysis

No risks detected for EXFO from our risk checks.


Snowflake Analysis

Excellent balance sheet and fair value.


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: EXFO has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

6.4%

EXFO

-1.3%

US Communications

1.5%

US Market


1 Year Return

16.2%

EXFO

-5.8%

US Communications

20.1%

US Market

Return vs Industry: EXFO exceeded the US Communications industry which returned -5.1% over the past year.

Return vs Market: EXFO underperformed the US Market which returned 20.1% over the past year.


Shareholder returns

EXFOIndustryMarket
7 Day6.4%-1.3%1.5%
30 Day1.7%-3.7%1.4%
90 Day-3.3%3.7%8.7%
1 Year16.2%16.2%-3.8%-5.8%22.7%20.1%
3 Year-21.7%-21.7%33.1%25.0%50.1%40.5%
5 Year11.0%11.0%59.4%41.7%73.1%54.1%

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

No news available

Valuation

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

5.2%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: EXFO ($4.15) is trading below our estimate of fair value ($4.38)

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


Price To Earnings Ratio

PE vs Industry: EXFO is poor value based on its PE Ratio (46.9x) compared to the Communications industry average (26.1x).

PE vs Market: EXFO is poor value based on its PE Ratio (46.9x) compared to the US market (18.4x).


Price to Earnings Growth Ratio

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


Price to Book Ratio

PB vs Industry: EXFO is good value based on its PB Ratio (1.3x) compared to the US Communications industry average (1.8x).


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: EXFO's forecast earnings growth (81% per year) is above the savings rate (1.7%).

Earnings vs Market: EXFO's earnings (81% per year) are forecast to grow faster than the US market (14.5% per year).

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

Revenue vs Market: EXFO's revenue (5.7% per year) is forecast to grow slower than the US market (7.6% per year).

High Growth Revenue: EXFO'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 EXFO'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: EXFO has high quality earnings.

Growing Profit Margin: EXFO became profitable in the past.


Past Earnings Growth Analysis

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

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

Earnings vs Industry: EXFO has become profitable in the last year, making it difficult to compare its past year earnings growth to the Communications industry (-25.2%).


Return on Equity

High ROE: EXFO'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: EXFO's short term assets ($126.6M) exceed its short term liabilities ($89.1M).

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


Debt to Equity History and Analysis

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

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


Balance Sheet

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

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


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: EXFO is profitable, therefore cash runway is not a concern.

Forecast Cash Runway: EXFO is profitable, therefore cash runway is not a concern.


Next Steps

Dividend

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


Dividend Yield vs Market

companyn/amarketbottom25%1.4%markettop25%3.7%industryaverage3.0%forecastin3Yearsn/a

Current dividend yield vs market & industry

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

High Dividend: Unable to evaluate EXFO'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 EXFO's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if EXFO'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 EXFO's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

13.7yrs

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 ($USD807.00K) is about average for companies of similar size in the US market ($USD1.11M).

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


Leadership Team

NamePositionTenureCompensationOwnership
Germain Lamonde
Founder & Executive Chairman20.1yrsUS$541.15k4.28% $9.9m
Philippe Morin
CEO & Director2.8yrsUS$807.00k1.23% $2.8m
Pierre Plamondon
CFO & VP of Finance24.1yrsUS$449.68k0.20% $468.6k
Vikas Arora
Chief Technology Officer11.6yrsno datano data
Vance Oliver
Director of Investor Relations0yrsno datano data
Benoit Ringuette
General Counsel & Corporate Secretary15.8yrsno data0.0020% $4.6k
Suzanne Daneau
Vice President of Human Resources0.3yrsno datano data
Stephen Bull
Vice President of Research & Development20.2yrsUS$364.79k0.087% $201.9k

13.7yrs

Average Tenure

60yo

Average Age

Experienced Management: EXFO's management team is seasoned and experienced (13.7 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Germain Lamonde
Founder & Executive Chairman20.1yrsUS$541.15k4.28% $9.9m
Philippe Morin
CEO & Director2.8yrsUS$807.00k1.23% $2.8m
Claude Séguin
Independent Director7yrsUS$65.30k0.0090% $20.8k
François Côté
Lead Director4.1yrsUS$69.07k0.012% $27.1k
Randy Tornes
Independent Director7yrsUS$79.00kno data
Angela Logothetis
Independent Director3.1yrsUS$79.00kno data

5.5yrs

Average Tenure

61yo

Average Age

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


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

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


Recent Insider Transactions

Ownership Breakdown

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


Top Shareholders

Company Information

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


Key Information

  • Name: EXFO Inc.
  • Ticker: EXFO
  • Exchange: NasdaqGS
  • Founded: 1985
  • Industry: Communications Equipment
  • Sector: Tech
  • Market Cap: CA$307.225m
  • Listing Market Cap: CA$231.831m
  • Shares outstanding: 55.66m
  • 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 Analysis2020/02/16 23:41
End of Day Share Price2020/02/14 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.