ADVA Optical Networking SE (ADV.DE) | Investment Case

1. Company Snapshot

1.a. Company Description

ADVA Optical Networking SE engages in the development, manufacture, and sale of optical and Ethernet-based networking solutions to deliver data, storage, voice, and video services worldwide.It offers open optical transport solutions, such as FSP 3000 open terminals, FSP 3000 open line systems, pluggables and subsystems, and optical access solutions; packet edge and aggregation products, including carrier Ethernet and programmable multilayer edge, metro aggregation, and edge computing products; disaggregated networking, such as packet optical terminals and ensemble activators.The company also provides network virtualization products comprising ensemble connectors, orchestrators, and harmony ecosystems, as well as operates ensemble virtualization director, a management platform for the creation and deployment of virtualized services; network infrastructure assurance products; timing and synchronization products; and automated network management products, such as ensemble optical, sync, fiber, and packet director, and ensemble controllers.

In addition, it offers professional services to plan, operate, and maintain the networks.The company sells its products to telecommunications service providers, private companies, universities, and government agencies directly, as well as through a network of distribution partners.ADVA Optical Networking SE was founded in 1994 and is headquartered in Munich, Germany.

As of July 8, 2022, ADVA Optical Networking SE operates as a subsidiary of ADTRAN Holdings, Inc.

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1.b. Last Insights on ADV

ADVA Optical Networking SE's recent performance was driven by its strong presence in the European high-growth tech sector, benefiting from easing US-China trade tensions. The company's innovative optical networking solutions are well-positioned to capitalize on the growing demand for 5G and fiber-optic infrastructure across Europe. Additionally, ADVA's recent share buyback program (2024) demonstrates its commitment to returning value to shareholders, which can be seen as a positive sign for its stock performance.

1.c. Company Highlights

Last Price	21.9
Change Percentage	0.92%
Open	21.8
Previous Close	21.7
Market Cap ( Millions)	1140
Volume	2371
Year High	21.9
Year Low	19.8
M A 50	21.66
M A 200	20.85

FCF Yield	4.33%
Dividend Yield	2.37%
ROE	-17.53%
Debt / Equity	19.86%
Net Debt / EBIDTA	871.99%
Price To Book	3.3
Price Earnings Ratio	-17.23
Price To FCF	23.07
Price To sales	2.58
EV / EBITDA	298.49

2. Transcript Summary

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3. NewsRoom

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.00%)

6. Segments

Product

Expected Growth: 8%

ADVA Optical Networking SE's 8% growth is driven by increasing demand for high-speed data transmission, 5G network deployments, and growing need for network infrastructure upgrades. Additionally, the company's focus on innovation, strategic partnerships, and expansion into new markets contribute to its growth momentum.

Services

Expected Growth: 8%

ADVA Optical Networking SE's 8% growth is driven by increasing demand for high-speed data transmission, 5G network deployments, and growing need for network infrastructure upgrades. Additionally, the company's focus on software-defined networking, network functions virtualization, and edge computing solutions also contribute to its growth.

7. Detailed Products

FSP 3000

A scalable and flexible optical transport solution for metro and long-haul networks

FSP 150

A compact and cost-effective optical transport solution for access and metro networks

ALPHA-OTS

A high-performance optical transport system for long-haul and ultra-long-haul networks

FSP Network Manager

A unified network management system for optical transport networks

OFC-4/8/16

A range of optical channel monitors for real-time network monitoring and troubleshooting

TeraFlex

A high-speed, low-latency optical transport solution for data center interconnect and metro applications

8. ADVA Optical Networking SE's Porter Forces

Forces Ranking

Threat Of Substitutes

ADVA Optical Networking SE operates in a niche market with limited substitutes, but the threat of substitutes is still present due to the evolving nature of the telecommunications industry.

Bargaining Power Of Customers

ADVA Optical Networking SE's customers, primarily telecommunications companies, have significant bargaining power due to their large scale and negotiating capabilities.

Bargaining Power Of Suppliers

ADVA Optical Networking SE has a diversified supplier base, which reduces the bargaining power of individual suppliers, and the company's strong relationships with suppliers also mitigate this risk.

Threat Of New Entrants

The high barriers to entry in the telecommunications equipment market, including significant R&D investments and regulatory hurdles, make it difficult for new entrants to challenge ADVA Optical Networking SE's position.

Intensity Of Rivalry

The telecommunications equipment market is highly competitive, with several established players competing for market share, leading to a high intensity of rivalry.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	15.93%
Debt Cost	3.95%
Equity Weight	84.07%
Equity Cost	6.50%
WACC	6.10%
Leverage	18.95%

11. Quality Control: ADVA Optical Networking SE passed 3 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

AudioCodes

A-Score: 5.1/10

Value: 5.8

Growth: 5.7

Quality: 5.9

Yield: 6.9

Momentum: 5.0

Volatility: 1.7

1-Year Total Return ->

Invisio

A-Score: 4.6/10

Value: 0.0

Growth: 8.3

Quality: 7.9

Yield: 0.6

Momentum: 8.0

Volatility: 3.0

1-Year Total Return ->

ADVA Optical Networking

A-Score: 4.4/10

Value: 3.5

Growth: 1.1

Quality: 2.2

Yield: 1.9

Momentum: 7.5

Volatility: 10.0

1-Year Total Return ->

Bittium

A-Score: 4.4/10

Value: 1.1

Growth: 5.9

Quality: 6.9

Yield: 1.2

Momentum: 10.0

Volatility: 1.0

1-Year Total Return ->

Frequentis

A-Score: 4.1/10

Value: 1.7

Growth: 4.4

Quality: 6.0

Yield: 0.6

Momentum: 10.0

Volatility: 1.7

1-Year Total Return ->

HMS Networks

A-Score: 3.8/10

Value: 0.2

Growth: 7.1

Quality: 6.3

Yield: 0.6

Momentum: 6.0

Volatility: 2.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

0.92%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

6.10%

ADVA Optical Networking SE - DE0005103006

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on ADV

1.c. Company Highlights

Less Volatile

Lower Growth

Lower Quality

Earnings Miss

Average Quality

Stable Momentum

Average Growth

2. Transcript Summary

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.00%)

6. Segments

Product

Expected Growth: 8%

Services

Expected Growth: 8%

7. Detailed Products

FSP 3000

FSP 150

ALPHA-OTS

FSP Network Manager

OFC-4/8/16

TeraFlex

8. ADVA Optical Networking SE's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: ADVA Optical Networking SE passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

21.9$

Current Price

21.9$

Potential

0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA