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What Is Symantec’s Value Proposition in the US Software Space?


May. 30 2016, Updated 7:05 a.m. ET

Symantec’s scale in the software space

Earlier in this series, we discussed Symantec’s (SYMC) fiscal 4Q16 and 2016 earnings. Now, let’s look at the company’s value proposition among select software companies in the United States. Let’s start with Symantec’s size.

As of May 13, 2016, and as the below chart shows, globally, Microsoft (MSFT) was the largest software player by market capitalization. It was followed by IBM (IBM). Although Symantec and FireEye (FEYE) are players in the software space, they command a more dominant presence in the software cybersecurity space.

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Symantec’s enterprise value multiples

Now let’s look at Symantec’s EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple. We’ll also look at other US software players.

Symantec was trading at a forward EV-to-EBITDA multiple of ~5.2x on May 2, 2016. This metric was lower than Microsoft’s and IBM’s multiples of ~9.6x and ~8.4x, respectively.

Symantec’s dividend yield

Symantec’s forward annual dividend yield was ~1.7% as of May 19, 2016. This was higher than Microsoft’s and IBM’s at ~2.8% and ~3.8%, respectively, as of May 2. FireEye doesn’t pay dividends.

For diversified exposure to companies in the US software space, you can consider investing in the Technology Select Sector SPDR ETF (XLK). XLK has ~38% exposure to application software.


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