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Is this Large Market Cap Stock target price reasonable for Brocade Communications Systems, Inc. (NASDAQ:BRCD)?

The company in question is, Brocade Communications Systems, Inc. (NASDAQ:BRCD) currently with a stock price of 8.79 (-0.34% today). The market cap for Brocade Communications Systems, Inc. is 3589.12, and is in the sector Technology, and Data Storage Devices industry. The target price for Brocade Communications Systems, Inc. is 10.21. Currently Brocade Communications Systems, Inc. is trading with a P/E of 15.75, and a forward P/E of 8.8. Average volume for Brocade Communications Systems, Inc. is 5613.76 and so far today it is 2581764.

Performance in the last year for Brocade Communications Systems, Inc. has been -13.34%. For EPS growth, Brocade Communications Systems, Inc. has seen a growth of 48.40%, and is looking to grow in the next year to 7.28%. More long term stats show that EPS growth has been 26.80% over the last five years and could be 2.77% for the next five years. Brocade Communications Systems, Inc. has seen sales growth quarter over quarter at 7.00%, with EPS growth quarter over quarter at -88.70%. The 20-day simple moving average is -5.67%, with the 200-day simple moving average coming to -2.86%.

Since the IPO date for Brocade Communications Systems, Inc. on the 5/25/1999, Brocade Communications Systems, Inc. has seen performance year to date to be -2.31%. With Brocade Communications Systems, Inc. trading at 8.79, the dividend yield is 2.49%, and the EPS is 0.56.

So could Brocade Communications Systems, Inc., be undervalued? Well as said before P/E is 15.75. The PEG is 5.69, P/S is 1.58 and the P/B is at 1.53. The P/cash is 3.11, with P/free cash flow at 12.94.

Brocade Communications Systems, Inc. ability to deal with debt shows that the current ratio is 2.3, and the quick ratio is 2.2. This is with long term debt/equity at 0.62, and total debt/equity at 0.65.

In terms of margins, Brocade Communications Systems, Inc. has a gross margin of 65.40%, an operating margin of 15.10% and a profit margin of 10.20%.Payout ratio for Brocade Communications Systems, Inc. is 33.60%. Return on assets come to 5.50% with return on investment coming to 11.80%.

Insider ownership for Brocade Communications Systems, Inc., is at 0.40% and institutional ownership comes to 91.00%. Outstanding shares are at 406.93. While shares float is 398.14. The float short is currently 3.57%, and short ratio is 2.54.

Disclaimer: Remember there is a risk to your investment, this is not a recommendation, nor personal advice, never invest more than you are able too loose.

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Mark Hines

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