Why Citrix Systems Is a Buy

Citrix Systems (CTXS) announced first quarter ended March 31, 2016 consolidated net revenue of $825.7 million, up 8.5 percent year-over-year from $760.8 million during the same period last year but, down 8.7 percent sequentially from $904.8 million in fourth quarter of 2015. Going forward, the company estimates second quarter of 2016 total revenue to be in the range of $810 million to $820 million.

Citrix Systems declared first quarter of 2016 adjusted net income of $184 million, or $1.18 per diluted share, up 74 percent year-over-year from non-GAAP net income of $106 million, or $0.65 per diluted share in first quarter of 2015.
Moving ahead, Citrix Systems estimates second quarter of 2016 adjusted diluted earnings per share to be in the range of $1.12 to $1.15.

The key cloud technology company reported continued year-over-year growth in both its top and bottom lines primarily driven by the notable products and services sales growth for the quarter.

Impressive growth

Citrix’s superior capability to execute and an impressive completeness of vision has encouraged Gartner to position the company in the "Leaders" quadrant of "Magic Quadrant for Enterprise Mobility Management (EMM) Suites" for June 2016 and for the third successive year.

Arca Continental (AC) is a major snack and beverage manufacturing company in Latin America that has recently illustrated significant global growth by leveraging advanced cloud and networking solutions of Citrix to securely, successively and uniquely operate round the clock, operating across more than 400 different distribution centers and handling more than a million transactions on a daily basis with about four million product boxes delivered each day.

The worldwide expanding business network of Citrix positions it strongly for delivering consistent and significant top and bottom line growths while encouraging the company to strategically invest in prospective growth opportunities while delivering attractive shareholder returns.

Microsoft and Citrix Systems recently declared the expansion of their strategic partnership to integrate their advanced mobility and cloud capabilities for uniquely supporting businesses to smoothly carry-on with their digital transformation processes. Further, Microsoft and Citrix are jointly working on innovative combinations between the Microsoft Enterprise Mobility Suite (EMS), NetScaler and Citrix XenMobile, depending on the rising customer demand.

Focusing in the right areas

According to a latest report by IDC on cloud and related services, the number of enterprises leveraging digital transformation policies are estimated to exceed twice their current count in the forthcoming 3 to 5 years. A notable demand for significant accessibility, convenience and agility are believed to make cloud, a key capability for delivering attractive digital methodologies while nearly half of total IT spending expected to be cloud-based till the fiscal year 2018.

Going forward, Citrix Systems is expected to be impressively executing upon its growth strategies by uniquely partnering with other global technology giants for strategic technology sharing to enable other global enterprises to easily implement cloud-based systems while increasingly catering to the globally rising demand for secured cloud-based IT solutions.

Citrix Systems uniquely delivered 930 bps of year-over-year improvement in adjusted operating margin for the first quarter of 2016 to be 29% over the same period last year. Operating cash flows for the quarter was about $340 million or $2.18 per share which is again a result of superior company execution for the period that has further enabled Citrix to repurchase 8, 55, 000 shares during the quarter averaged at price of $71.96  and offer attractive shareholder returns.


Overall, the investors are advised to “Buy” equity in Citrix Systems, Inc. considering the company’s significant near-term and longer term growth prospects with PEG ratio of 1.12, indicating healthy company growth. The profit margin of 11.19% also seems attractive. Further, Citrix too has strong balance sheet with total cash and total debt of $1.16 billion and $1.32 billion respectively, encouraging the company to make future growth investments while delivering attractive shareholder returns.
Published on Jul 11, 2016
By Vinay Singh

Copyrighted 2020. Content published with author's permission.

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