Is F5 Still Poised for Growth After 60% Surge and Latest Earnings Beat?

Trying to figure out what to do with F5 stock? You are not alone. Whether you are watching the ticker for a potential entry point or wondering whether to let your gains run, F5 has become a talking point for investors this year. The stock has climbed sharply, posting a 24.8% year-to-date return and a notable 60.5% gain over the past 12 months. This consistent upward trend, especially over longer timeframes, often leads investors to ask: is it too late to buy in, or could there be more room to run?

Even after these gains, F5 is trading at a 12.7% discount to its intrinsic value estimate and remains nearly 4.1% below the average analyst price target. The company delivered annual revenue growth of 5.5% and net income growth of 13%, which helps explain why investor sentiment has improved, particularly as IT spending cycles have strengthened. However, after running F5 through a series of valuation checks, it scores only 2 out of 6 on undervaluation. In other words, it is not deeply undervalued, but it does show some signs that there may still be upside potential.

This raises an important question: how should we weigh the numbers to determine the stock's true value? In the next section, we will walk through the major valuation models and what they reveal for F5. If you continue reading, I will share a smarter framework for valuation that could change the way you think about the entire sector.

F5 delivered 60.5% returns over the last year. See how this stacks up to the rest of the Communications industry.

Approach 1: F5 Cash Flows

A Discounted Cash Flow (DCF) model estimates a company’s true value by projecting its future cash flows and then discounting them back to what they are worth in today’s dollars. This helps investors gauge what a stock might reasonably be worth now, based on expectations for its future performance.

For F5, the latest twelve months’ Free Cash Flow stands at $945.9 Million. Analysts expect solid growth ahead, with free cash flow projected to reach about $1.3 Billion in 2035. Over the next decade, annual free cash flows are expected to rise gradually, a reflection of the company’s stable business and underlying market demand.

Based on this DCF approach, the estimated intrinsic value is $360.10 per share. Compared to the current share price, F5 appears to be trading at a 12.7% discount to its calculated fair value, making the stock 12.7% undervalued according to this approach.

Result: UNDERVALUED

Our DCF analysis suggests F5 is undervalued by 12.7%. Track this in your watchlist or portfolio, or discover more undervalued stocks based on DCF analysis.

Approach 2: F5 Price vs Earnings (PE)

Price-to-earnings (PE) is widely regarded as the most meaningful valuation measure for profitable companies like F5. This ratio shows how much investors are paying today for each dollar of current earnings. It provides a straightforward way to compare stocks across industries or to the broader market.

What qualifies as a “fair” PE ratio depends on the company's expected growth rate and the perceived risk of its future earnings. Fast-growing companies with stable earnings generally have higher PE ratios. In contrast, more mature or riskier firms usually trade at lower multiples.

F5 currently trades at 27 times earnings. For context, the average PE ratio in the Communications industry is 25.4 times, and the peer group trades at a much higher average of 66.6 times. Meanwhile, Simply Wall St's Fair Ratio for F5 is 25 times, reflecting its specific growth outlook, profitability, market position, and other company-specific factors.

With F5's PE slightly above the Fair Ratio and well below its peer average, this suggests the stock is valued about right in relation to its fundamentals at current prices.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your F5 Narrative

Narratives are simple, story-driven frameworks that let you connect your unique perspective about a company to concrete numbers, such as its fair value and financial forecasts for future revenue, earnings, and margins.

Rather than relying only on ratios or consensus targets, Narratives help you translate your understanding, whether it relates to management quality, technology leadership, or industry shifts, into an actionable and forward-looking valuation.

On the Simply Wall St platform and within its community of millions of investors, Narratives make this process accessible to everyone. This empowers you to quickly visualize and adjust your expectations as new news, earnings, or sector changes emerge.

By comparing your Narrative’s Fair Value to today’s Price, you gain clear and dynamic signals about when to buy or sell, instead of just following what others think.

For example, analysts’ most optimistic F5 Narrative gives a fair value of $390 per share, while the most skeptical sees fair value at just $260. This shows how your outlook can directly shape your investment decision.

Do you think there's more to the story for F5? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com