Brocade Communications Systems, Inc. : BRCD-US: Dividend Analysis : June 12th, 2017 (record date) : By the numbers : June 9, 2017

Our analysis is based on comparing Brocade Communications Systems, Inc. with the following peers – NetApp, Inc., Quantum Corporation, HP Inc., Western Digital Corporation, International Business Machines Corporation, Cisco Systems, Inc. and Juniper Networks, Inc. (NTAP-US, QTM-US, HPQ-US, WDC-US, IBM-US, CSCO-US and JNPR-US).

Brocade Communications Systems, Inc.’s dividend yield is 2.18 percent and its dividend payout is 157.14 percent. This compares to a peer average dividend yield of 2.20 percent and a payout level of 41.99 percent. This combination of a relatively lower dividend yield and a higher payout ratio suggest that the dividend payout might not be sustainable. The contra-indicator here is the relatively strong dividend quality score of 75 out of a possible score of 100, which points to some ability to sustain the higher payout ratio.

Dividend Yield
Dividend Quality Score

Dividend Quality Overview

  • Over the last twelve months (prior to April 30, 2017), BRCD-US paid a medium quality dividend, which represents a yield of 1.74% at the current price.
  • Dividend quality trend has not been consistent over the last five years. Dividends were paid during 3 of these years — of these 2 were high quality and 1 was medium quality.
  • The ending cash balance, with a dividend coverage of 14.11x, provides a substantial cushion in case of a significant reduction of cash flows in the future.
Dividend Quality Score Vs Dividend Yield

Quadrant label definitions. Hover to know more

High Score;High Yield, High Score;Low Yield, Low Score;Low Yield, Low Score;High Yield

Dividend Coverage

Over the last twelve months (prior to April 30, 2017), BRCD-US paid a medium quality dividend.

The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 3.15x), investing cash flow (coverage of -4.98x), issuance cash flow (coverage of 1.46x) and twelve-month prior cash (coverage of 15.50x), for a total dividend coverage of 15.11x.

BRCD-US‘s issuance cash flow includes outflows from net share buybacks (coverage of -6.43x). Thus, the total coverage including share buybacks is 21.54x, which reflects our assumption that the cash paid for share buybacks is discretionary and could instead be used to pay dividends.

Dividend Coverage by Cash Flow (TTM)

These coverage ratio factors imply that the firm’s net cash inflow from issuance was required (in addition to operating and investment cash) to pay the dividend, which suggests a medium dividend quality.

Dividend History

Item 2012-10-31 2013-10-31 2014-10-31 2015-10-31 2016-10-31 Latest
Dividend Yield (%) 0 0 0.66 1.56 2.4 2.18
Dividend Payout (%) 0 0 13.21 20.25 39.22 157.14

A complete list of metrics and analysis is available on the company page.

Company Profile

Brocade Communications Systems, Inc. engages in the provision of innovative network solutions. It supplies networking hardware and software, including Storage Area Networking solutions and Internet Protocol networking solutions for businesses and organizations worldwide. It operates through the following segments: Storage Area Networking Products, Internet Protocol Networking Products, and Global Services. The Storage Area Networking Products segments include infrastructure products and solutions that assist customers in the development and delivery of storage and server consolidation, disaster recovery and data security, and in meeting compliance issues regarding data management. These products are used to build storage area networks and are generally used in conjunction with servers and storage subsystems, Storage Area Networking interconnection components such as host bus adapters and server and storage management software applications and tools. The Internet Protocol Networking segments products include Layer 2 and Layer 3 Ethernet switches and routers that are designed to connect users over private and public networks, including local area, metro, and within & across global data centers. Global Services segment include break and fix maintenance, installation, consulting, network management and software maintenance, and post-contract customer support revenue. Brocade Communications Systems was founded by Paul R. Bonderson, Jr., Kumar Malavalli and Seth D. Nieman on August 24, 1995 and is headquartered in San Jose, CA.

Disclaimer

The information presented in this report has been obtained from sources deemed to be reliable, but AnalytixInsight does not make any representation about the accuracy, completeness, or timeliness of this information. This report was produced by AnalytixInsight for informational purposes only and nothing contained herein should be construed as an offer to buy or sell or as a solicitation of an offer to buy or sell any security or derivative instrument. This report is current only as of the date that it was published and the opinions, estimates, ratings and other information may change without notice or publication. Past performance is no guarantee of future results. Prior to making an investment or other financial decision, please consult with your financial, legal and tax advisors. AnalytixInsight shall not be liable for any party’s use of this report. AnalytixInsight is not a broker-dealer and does not buy, sell, maintain a position, or make a market in any security referred to herein. One of the principal tenets for us at AnalytixInsight is that the best person to handle your finances is you. By your use of our services or by reading any our reports, you’re agreeing that you bear responsibility for your own investment research and investment decisions. You also agree that AnalytixInsight, its directors, its employees, and its agents will not be liable for any investment decision made or action taken by you and others based on news, information, opinion, or any other material generated by us and/or published through our services. For a complete copy of our disclaimer, please visit our website www.analytixinsight.com.