Ciena Corp (CIEN) stock analysis

P/E above its 5-year median

Ciena's P/E of 66.1 is above its own 5-year median of 47.6.

P/E above the industry

Ciena's P/E of 66.1 is above the Communications Equipment median of 24.9.

EV/EBITDA above its 5-year median

Ciena's EV/EBITDA of 57.6 is above its 5-year median of 31.7.

P/B above the industry

Ciena's price-to-book of 13.73 is above the Communications Equipment median of 2.54.

Trading above fair value

The share price of $296.04 is above our fair value estimate of $137.56.

Margin of safety under 20%

The price is 115% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 9.5% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -5.3% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 365% over the last twelve months, against a 5-year average of -19.3% a year.

Growing faster than the industry

Revenue grew 32.6% over the last twelve months; the Communications Equipment median is 10.9%.

Guidance raised

Ciena raised its fiscal year 2026 revenue guidance outlook on Sep 3, 2026.

Gross margin improving

Gross margin was 44.1% over the last twelve months, against 41.6% a year earlier.

Return on equity under 15%

Return on equity was 22.4% over the last twelve months and averaged 8.0% over five years; we look for 15% on both.

Return on capital over 10%

Return on invested capital was 20.0%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Ciena's return on equity of 22.4% is above the Communications Equipment median of -3.7%.

Earnings shrank over 5 years

Net income shrank 19.3% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 10.9% over the last twelve months, against a 5-year average of 5.7%.

Net margin above the industry

Ciena's net margin of 10.9% is above the Communications Equipment median of -2.2%.

High debt

Debt is 106% of shareholders' equity, above the 40% we consider low.

Debt rising against equity

Debt to equity rose from 27.2% five years ago to 106%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 32.7% of total debt.

Interest well covered

Operating income covers interest expense 10.6 times.

Short-term assets cover short-term debts

Current assets are 3.80 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 6.29; above 3 is the safe zone and below 1.8 the distress zone.

No dividend

Ciena has not paid a dividend in the last twelve months.

Yield against Treasuries

No dividend.

Yield against the market

No dividend.

Dividend stability

No dividend.

Earnings cover

No dividend.

Cash-flow cover

No dividend.