Quality Investor

NetScout Systems, Inc.

Rank #229Capital Return

NTCT · Nasdaq · Technology

NetScout Systems, Inc. (NTCT) — Rank #229 by gross profitability (GP/assets 0.30) · ROE 5.7% · Piotroski F-Score N/A.

As-of 2026-09-15 · CIK 0001078075 · all metrics point-in-time as of the filing date.

About

NetScout Systems, Inc. provides carrier service assurance, cybersecurity, and Distributed Denial-of-Service (DDoS) solutions to protect digital business services against disruptions.

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It offers nGeniusONE management software to predict, preempt, and resolve network and service delivery problems, as well as facilitate the optimization and capacity planning of their network infrastructures; and specialized platforms and analytic modules to analyze and troubleshoot traffic in radio access and Wi-Fi networks; and Omnis Insights, a solution that is designed to generate a high-fidelity and curated dataset that strengthens observability and cybersecurity operations. Its platform provides real-time generation and analysis of information-rich, high-volume network-derived data for use its applications and partner networks. In addition, it offers ISNG, a real-time information platform that provides insights to optimize network performance; packet flow systems that delivers targeted network traffic access to a range of monitoring and cybersecurity tools and systems, including the nGeniusONE application; vSTREAM, a virtualized form factor version; Infinistream, an advanced passive network probe; and markets test access points that enables full and non-disruptive access to network traffic. Further, the company provides cybersecurity solutions to protect networks against DDoS attacks under the Arbor solutions, including Arbor Sightline, Arbor Threat Mitigation System, Arbor Insight, Arbor Edge Defense, and Omnis Cyber Intelligence solutions. It serves enterprise customers in financial services, technology, manufacturing, healthcare, utilities, education, transportation, and retail; mobile, wireline, and cable operators, internet service providers, and cloud providers industries; and government and associated agencies through a direct sales force, and indirect reseller and distribution channels.

The company was incorporated in 1984 and is headquartered in Westford, Massachusetts.

Industry
Software - Infrastructure
Sector
Technology
State
DE
Filer Category
Large accelerated filer
Fiscal Year End
March 31

Price History

NTCT+41.0% · +7.1% CAGRSPY+80.5% · +12.5% CAGR

Company Snapshot

P/E and reverse DCF are the primary valuation lenses at this stage.

Market Cap

$2.78B

P/E (annual)

29.4

P/S (annual)

3.2

P/B

1.7

P/OCF (annual)

9.4

Shareholder Yield

6.7%

Employees

2,052

Industry

Software - Infrastructure

Exchange

Nasdaq

Signal Flags

2 green1 yellow1 red
Revenue growth acceleratingGrowth rate increasing year over year
Sequential beat (rev + EPS)Both revenue and EPS exceeded prior quarter — 1-quarter streak
Disclosure regressionA previously-disclosed line item is no longer reported — worth checking the filing for why
Revenue declining YoYRevenue contracted year over year

Quality Profile

Profitability

1/1 pass
GP / assets
0.30
Return on equity
5.7%
Gross margin trend
PASS

Safety

1/1 pass
Balance-sheet safety
PASS
Debt / equity
0.39
Current ratio
1.83×
Net cash
$668.47M

Cash Flow

3/3 pass
Positive FCF
PASS
Cash-backed earnings
PASS
Accruals healthy
PASS
SBC / revenue
7.0%

Growth

1/2 pass
Revenue growth
-5.5%
Piotroski F-Score
N/A
Share dilution
-6.7%

Terry Smith quality gate

Passes 2/5 Terry Smith thresholds

1 of 5 threshold not computable from filed data.

What Growth Is Priced In

Implied revenue growth (10Y)

-2.1%

incredible deal

The annual FCF growth rate today's price requires over a 10-year horizon (discount rate 10%, terminal growth 2.5%).

Buyback tailwind: -6.7% — per-share value needs a total required return of -8.8% once share-count change is priced in.

vs. own 6-year median revenue growth: 6.2%

within its own history

Cost-of-equity sensitivity (implied growth at different discount rates)

r = 8%

-5.8%

r = 10% (base)

-2.1%

r = 12%

1.1%

Net debt / market cap: -23.9%

Base FCF: $285.4M3Y mean FCF: $179.4M

Valuation History

Current multiple vs historical range at each filing date. Band spans 25th-75th percentile.

P / E

Price / diluted EPS

N/A
22.2xmed 27.7x98.5x

P / S

Price / revenue per share

2.1xCheap
2.1xmed 2.8x4.1x

P / B

Price / book value per share

1.0xCheap
0.8xmed 1.9x4.0x

P / GP

Price / gross profit per share

2.9xCheap
2.9xmed 3.5x5.2x

P / FCF

Price / free cash flow per share

9.2xCheap
9.2xmed 15.0x28.2x

FCF yield, shareholder yield, and buyback activity are the primary reads at this stage.

Profitability

Gross profitability (GP / assets)

0.30

Primary signal (Novy-Marx).

5th of 8 SIC 7373 peers

Return on equity

5.7%

Gross margin

79.4%

1st of 7 SIC 7373 peers

Revenue growth (YoY)

-5.5%

Gross margin improving

Margin trend vs prior year.

PASS

Operating Leverage

2017201820192020
Revenue vs COGS
Revenue vs OpEx
Op. Income vs Revenue

Growth

Revenue CAGR (3Y)

Revenue CAGR (5Y)

Earnings CAGR (3Y)

17.0%

FCF CAGR (3Y)

Anti-fragile safety

Balance-sheet safety

Composite anti-fragile check.

PASS

Debt / equity

0.39

1st of 8 SIC 7373 peers (best = lowest)

Current ratio

1.83×

2nd of 8 SIC 7373 peers

Quick ratio

1.68×

Net cash

$668.47M

Cash & equivalents minus total debt.

Cash-flow health

Free cash flow

$285.43M

Operating cash flow minus capex.

Positive free cash flow

PASS

FCF / net income

1.99

Cash-backing of earnings.

FCF/NI divergence

Unfavorable divergence (yellow flag).

PASS

Accruals healthy

Cash-backed earnings.

PASS

SBC / revenue

7.0%

Stock-based comp intensity.

Piotroski F-Score

F-Score

N/A

Only 8/9 components determinable.

Lifecycle Phase History

20152020
Op. Leverage
Hypergrowth
Decline
Startup