What’s Behind Juniper Networks’ Stock’s Strong Underperformance Of The S&P Since 2017?
Juniper Networks Inc. (NYSE: JNPR) stock price lost around 3% from $28.50 in 2017 end to around $27 currently, primarily due to unfavorable changes in its P/S multiple. During this period, the company also witnessed a 2% drop in revenues, and despite a drop in its outstanding share count, the company’s stock price has remained roughly at the same level it was five years ago. Additionally, over the same period, the S&P 500 returned around 45%, meaning that Juniper stock has strongly underperformed the index since 2017-end.
In our interactive dashboard, Why Juniper Networks Stock Moved: JNPR Stock Has Lost 3% Since 2017, we break down the factors behind this move.
(A) JNPR’s Total Revenue has decreased 2% from $5.03 billion in FY 2017 to $4.93 billion on an LTM basis
- JNPR’s total revenue initially dropped from $5.03 billion in FY 2017 to as low as $4.4 billion in FY 2019 and 2020.
- Sales have since recovered to $4.7 billion in FY 2021, and currently stand even higher at $4.9 billion on an LTM basis.
- The company develops and markets networking products, including routers, switches, network management software, network security products, and software-defined networking technology.
- Product sales made up 65% of the company’s total sales in FY 2021, bringing in $3.08 billion, with services sales making up the remaining 35%.
- For additional details about JNPR’s revenues and comparison to peers, see Juniper Networks (JNPR) Revenue Comparison
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(B) Revenue per share (RPS) increased 14% from $13.30 in 2017 to $15.21 currently
- JNPR’s revenue dropped from $5 billion in 2017 to $4.9 billion currently, while the outstanding share count dropped from 378 million in 2017 to around 324 million currently.
- Due to this, RPS has risen from $13.30 in FY ’17 to $15.21 currently.
(C) Price-To-Sales (P/S) multiple for JNPR rose strongly from 1.8x in 2017 to 2.4x by 2021 end, but has pulled back to 1.8x currently, around the same as its 2017 level
- JNPR’s P/S multiple rose strongly to around 2.4x by late 2021, on the back of rising investor expectations surrounding increased demand for the company’s products and services.
- However, due to the current geopolitical tensions and increased economic uncertainty weighing on the broader markets, the P/S multiple has pulled back, currently standing at around 1.8x.
- For additional details about the company stock returns, and comparison to peers, see Juniper Networks (JNPR) Stock Return Comparison.
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| Returns | Sep 2022 MTD [1] |
2022 YTD [1] |
2017-22 Total [2] |
| JNPR Return | -3% | -23% | -2% |
| S&P 500 Return | -3% | -19% | 72% |
| Trefis Multi-Strategy Portfolio | -3% | -18% | 225% |
[1] Month-to-date and year-to-date as of 9/16/2022
[2] Cumulative total returns since the end of 2016
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