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What Can You Expect from FireEye's 3Q16 Earnings?

PART:
1 2 3 4 5 6 7 8 9
Part 8
What Can You Expect from FireEye's 3Q16 Earnings? PART 8 OF 9

FireEye’s Value Proposition in the Cybersecurity Space

FireEye’s scale in the cybersecurity space

In this part of the series, we’ll look at FireEye’s (FEYE) value proposition among select US cybersecurity companies. On October 27, 2016, Cisco Systems (CSCO) was the largest player globally by market capitalization in the security space. Cisco Systems is considered a leader in the overall security appliance market.

Symantec (SYMC), Palo Alto Networks (PANW), FireEye, Barracuda (CUDA), and Fortinet (FTNT) are some of the leading players in the cybersecurity space.

FireEye’s Value Proposition in the Cybersecurity Space

FireEye’s Value Proposition in the Cybersecurity Space

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FireEye’s enterprise value multiples

Now, let’s look at FireEye’s EV-to-EBITDA1 multiple. We’ll also look at other US cybersecurity players.

Currently, FireEye has negative EBITDA, which is why we haven’t included it here. The forward EV-to-EBITDA multiple for Palo Alto Networks stood at ~21.4x. Cisco Systems had a multiple of ~6.6x, and Fortinet had a multiple of 15.6x on October 27, 2016.

FireEye’s dividend yield

Cisco Systems’s forward annual dividend yield was ~3.4% on October 27, 2016. This was higher than Symantec’s forward annual dividend yield of ~1.2%. Most of the companies in the cybersecurity space are relatively new, which is why most of them don’t pay dividends. These companies include Palo Alto Networks, FireEye, and Fortinet.

Investors who want to gain exposure to Cisco could consider investing in the PowerShares QQQ ETF (QQQ). QQQ invests ~2.7% of its holdings in Cisco and has an ~28.4% exposure to application software.

In the final part of our series, we’ll see what analysts recommend for FireEye.

  1. enterprise value to earnings before interest, tax, depreciation, and amortization
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