By Rob Otman
Gigamon (NYSE: GIMO) is a $2 billion company today. Investors that bought shares one year ago are sitting on a 19.15% total return. That’s above the S&P 500’s return of 14.71%.
Gigamon stock is beating the market, but does that make it a good buy today? To answer this question we’ve turned to the Investment U Stock Grader. Our research team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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Earnings-per-Share (EPS) Growth: Gigamon reported a recent EPS growth rate of 157.14%. That’s above the software industry average of 19.93%. That’s a great sign. Gigamon’s earnings growth is outpacing competitors.
Price-to-Earnings (P/E): The average price-to-earnings ratio of the software industry is 166.07. And Gigamon’s ratio comes in at 74.02. It’s trading at a better value than many of its competitors.
Debt-to-Equity: The debt-to-equity ratio for Gigamon stock is 0. That’s below the software industry average of 15.16. The company is less leveraged.
Free Cash Flow per Share Growth: Gigamon’s FCF has been lower than its competitors over the last year. That’s not good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.
Profit Margins: The profit margin of Gigamon comes in at 7.55% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Gigamon’s profit margin is below the software average of 18.22%. So that’s a negative indicator for investors.
Return on Equity: Return on equity tells us how much profit a company produces with the money shareholders invest. The ROE for Gigamon is 23.65%, and that’s above its industry average ROE of 10.92%.
Gigamon stock passes four of our six key metrics today. That’s why our Investment U Stock Grader rates it as a buy with caution.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth. For more details, click here.
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Source:: Investment You
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