NTCT - Embedded Expectations Analysis - 2020 01 14
NetScout Systems, Inc. (NTCT:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 15.9x Uniform P/E. At these levels, markets are pricing in bearish expectations for the firm, and management may be concerned about demand, their deals with the federal government, and working capital requirementsSpecifically, management may be concerned about Arbor integration issues, their HNT tools business divestiture, and a lack of demand for visibility as a software. In addition, they may lack confidence in their ability to execute on their deals with the federal government and in their ability to ensure optimal customer experience in video services. Finally, management may be concerned about international entity working capital requirements, and they may be exaggerating the benefits of their advanced technology partnership with AWS
NetScout Systems provides service assurance and security solutions that are used by customers to assure their digital business services against disruption. Using its Adaptive Service Intelligence technology, the company's solutions convert network traffic data, often referred to as wire data, into metadata, or smart data, the company's offerings can help customers identify and troubleshoot network and application performance issues, defend their networks from distributed denial of service attacks, and find and isolate network threats. The company's products are categorized as service assurance solutions for network and application performance, and business intelligence analytics and cybersecurity solutions.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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