Symantec as compared to its security and storage peers
We’ve compared Symantec with other storage backup/recovery stocks, such as EMC (EMC), International Business Machines Corp (IBM), Netapp Inc (NTAP), and CommVault Systems (CVLT). From a multiples perspective, Symantec is cheaper than peers EMC and Netapp at a 13.8x P/E, but higher than IBM. Peer CommVault, which has the highest P/E ratio of 52x saw software revenue growth of 20% in its fiscal third quarter 2014 results driven by increased demand and brand recognition of its Simpana 10 software suite and a high volume of enterprise deals. Symantec has a high gross margin while its operating and profit margins are in line with its peers.
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We also compared Symantec’s security peers such as Check Point Software Technologies (CHKP), AVG Technologies (AVG), Cisco (CSCO) and Intel (INTC), which acquired Symantec’s long term rival Mcafee. Israel-based network security peer Check Point leads in terms of multiples with a 20.8x P/E, and is also ahead in terms of operating and profit margins. As we discussed in the earlier part of this series, cyber security is currently an upcoming sector with significant opportunities for growth.
Symantec boasts of a high dividend yield at 2.23%. In January, the company announced a quarterly cash dividend payment of $0.15 per share. During fiscal third quarter 2014, Symantec repurchased 5.3 million shares for $125 million at an average price of $23.76. At the end of the third quarter, Symantec had $783 million remaining for future repurchases in the current board authorized stock repurchase plan.
Despite the uncertainly surrounding the company currently, analysts such as JP Morgan have been positive about the stock and noted that “the macroeconomic environment and efforts to restructure/transform Symantec could have a near-term disruptive impact, but we continue to believe the shares are worth meaningfully more than where they trade today.”