JDSU Market Research & Analysis Report
Updated Jul 6, 2015

Growth and Balance Sheet

JDSU GAAP net revenue was $410.7 million, with net loss of $(13.2) million, or $(0.06) per share. Prior quarter GAAP net revenue was $437.1 million, with net loss of $(25.1) million, or $(0.11) per share. GAAP net revenue for fiscal third quarter 2014 was $418.0 million, with net loss of $(1.5) million, or $(0.01) per share. Non-GAAP net revenue was $410.7 million, with net income of $27.6 million, or $0.12 per share. Prior quarter non-GAAP net revenue was $437.1 million, with net income of $35.4 million, or $0.15 per share. Non-GAAP net revenue for fiscal third quarter 2014 was $418.0 million, with net income of $23.4 million, or $0.10 per share. JDSU delivered better-than-expected operating margin and EPS despite muted carrier spending that impacted our Network and Service Enablement businesses. CEO Tom Waechter  noted the company had produced “better-than-expected operating margin and EPS” even though it faced “muted carrier spending that impacted our Network and Service Enablement businesses.” The Company held $815.5 million in total cash and investments and used $22.9 million of cash in operations during the quarter, primarily due to separation-related activities and a reduction in accounts payable. For the fiscal fourth quarter ending June 27, 2015, the Company expects non-GAAP net revenue to be $423 million +/- $10 million and non-GAAP earnings per share to be $0.11 +/- $0.02.

Valuation

JDSU Pharmaceutical Industries Limited P/E stands at 16.75 below the industry average of 19.63, and below the S&P 500 average of 17.50 The company is currently trading above the maximum P/E ratio of 15x, and over the last five years, the company’s shares have traded in the range of 232.60x to 46.70x trailing 12-month earnings. JDSU's current Price/Sales of 1.56 is above the average of its industry of 1.40. JDSU’s head to head comparison to its main competitors shows that the company has gross margin below its peers, and one that is above the industry average. The achieved operating margin of the company is below the average operating margin of the selected competitors, and it is below the industry average. The quarterly revenue is above the industry average. The beta of 1.12 implies higher volatility of the stock with respect to the S&P 500. JDSU has shown negative earnings consistency over the last five years. Company’s earnings have increased by 3.78% over the same period. The current quarter earnings in comparison to the same quarter last year have decreased by 500.00%. JDSU’s Total Debt/Equity of 52.63 is below the required maximum and it is below the industry average. JDSU’s current price levels are above the maximum level, is trading  19.00% below the 52 week high of $14.25, and the technical analysis give a bearish view of the stock. The majority of analyst ratings are neutral. JDSU pays no dividend.

About JDSU

JDS Uniphase Corporation is a provider of communications test and measurement solutions and optical products for telecommunications service providers, wireless operators, cable operators, network-equipment manufacturers (NEMs), and enterprises. The Company operates in three segments: Communications Test and Measurement (CommTest), Communications and Commercial Optical Products (CCOP), and Optical Security and Performance Products (OSP). The Company also provides anti-counterfeiting technologies for currencies and other high value documents and products. In addition it delivers commercial lasers for manufacturing applications. In January 2014, the Company acquired Network Instruments, a developer of enterprise network and application performance management solutions.

Competitor Comparison

JDS Uniphase Corporation (NasdaqGS: JDSU) N.V.

Highlights

The Company competes with Agilent, Anritsu, Danaher, Exfo, Ixia, Spirent, Finisar, Fujitsu, Furukawa Electric, Oclaro, Oplink Communications, Sumitomo Electric, oherent, IPG Photonics, Rofin-Sinar, Newport Corporation, Spectrolab and Emcore, Asahi, Fuji Photo-Optical, Nikon, Nitto Optical, Barr Associates and Deposition Sciences. The stock closed yesterday’s trading session at $11.49. In the past year, the stock has hit a 52-week low of $10.62 and 52-week high of $14.25. JDSU has a market cap of $2.67 billion and is part of the healthcare sector.

• Inorganic growth strategy  
• Investment in research and development   

• High dependence on SICPA

JDSU Intrinsic Value

Stock Valuation Model & Intrinsic Value Definitions

Investors should keep an eye open for stocks that are trading within 10% of their 52-week highs, as it is likely to continue in its upward trend. JDSU's 52 week high is $14.25 current price is 11.49, is 19.00% below the 52 week high.

The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which in this model states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. The company has a P/E ratio of 16.75 below the average industry P/E ratio of 19.63 and is e the below S&P 500 P/E ratio of 17.50.

When there is strong insider ownership which we define as 8% or more, management is more likely to act in the best interest of the company, as their interests are right in line with that of the shareholders. Insiders own 0.22% of JDSU stock. Management's representation is not large enough. This does not satisfy our minimum requirement; companies that pass this test are more attractive to our valuation model

The model is using several technical indicators (MACD, RSI, MFI, OBV, position Indicators) to forecast the trend of the stock for 6 and 12 months, and assign a value.

JDSU is trading in the range of $11.31 - $13.22 in the past 30 days. The stock has been showing support at $11.10 and resistance in the $12.20 range. The stock is trading below the 50-Day Moving Average and below the 200-Day Moving Average. The RSI(14) is 21.87. Our indicators give a bearish view on JDSU.

The financial health of the company the higher the better, we evaluate all the financial ratios of the company.

Investor’s sentiment for the stock.

The model assigns a value according to analyst’s recommendation for the stock. Analyst rating on Reuters.com is 3 Buy, 4 Outperform, 10 Hold, 0 Underperform and 1 Sell.

We are searching for EPS numbers that are better than the previous year's. One dip is allowed, but the following year's earnings should be higher than the previous year. JDSU’s annual EPS for the last 5 years were -0.27, 0.34, -0.11, 0.24, -0.08 this type of earnings action is negative.

The company must have a low Debt/Equity ratio, which indicates a strong balance sheet. The Debt/Equity ratio should not be greater than 25% or should be less than the average Debt/Equity for its industry. JDSU’s have total debt/equity ratio of 52.63% which is negative.

The EPS growth for this quarter relative to the same quarter a year earlier is above the minimum 15% that this model likes to see for a "good" growth company. Stocks with improving earnings are worthy of your extra attention. JDSU’s EPS growth for this quarter relative to the same quarter a year earlier is -500.00%, below our target.

This stock valuation model looks for annual earnings growth above 12%, but prefers higher than 20%. JDSU’s annual earnings growth rate over the past five years is 3.78%, below the target growth rate.

¹Tradespoon Score and Outlook: This score conveys Tradespoon’s long-term outlook of 1 to 5 years for a particular stock. Tradespoon uses proprietary methods to rate its trading picks on a scale from 1 to 10, with a 10 being the most favorable expected risk and return outlook. To determine a stock’s rating, Tradespoon uses an advanced algorithm that factors in fundamental and technical analysis to determine a stock's expected risk and return.