Extreme Networks Inc. Common Stock (EXTR)

FairStock Score: 27/100 — RISKY

Key Financials

Strengths

• Generates $142 million in annual free cash flow (6.2% yield on market cap)
• Strong Piotroski F-Score of 8/9 indicating robust financial health across profitability, leverage, and efficiency metrics
• Solid return on equity of 12.4% above cost of capital

Concerns

• Trades significantly above Graham Number ($1) with negative 1641% margin of safety—limited downside protection
• High leverage at 2.21x debt-to-equity increases financial risk and interest expense burden
• Altman Z-Score of 0.4 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

Extreme Networks Inc. Common Stock is a small-cap technology company valued at $2.3 billion. The business generates $1.2 billion in annual revenue with a 0.6% net margin and $142 million in free cash flow. From a quality standpoint, Extreme shows near-perfect Piotroski F-Score of 8/9 indicating exceptional financial health and distressed Altman Z-Score of 0.4 warrants caution. On valuation, the stock is commanding a steep 281.7x multiple, with trades far above its Graham Number ($1) with no margin of safety. Growth dynamics show revenue growing at 13.8% and profit growth of 6.7%. Our composite FairStock Score of 27/100 reflects below-average fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Improving fundamentals and sector tailwinds could drive meaningful earnings growth, compressing the effective multiple for patient investors. With $142 million in annual free cash flow (6.2% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 282x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer