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A Look at Symantec’s Value Proposition in the US Software Space

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Symantec’s scale in the software space

So far in this series, we’ve covered Symantec’s (SYMC) latest acquisition of Blue Coat Systems. 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 June 12, 2016, and as you can see in the graph below, globally, Microsoft (MSFT) is the largest software player by market capitalization. It’s 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 the multiples of other US software players.

Symantec was trading at a forward EV-to-EBITDA multiple of ~4.97x on June 12, 2016. This metric was lower than Microsoft’s and IBM’s multiples of ~9.8x and ~8.7x, respectively.

Symantec’s dividend yield

Symantec’s forward annual dividend yield was ~1.7% as of June 12, 2016. This was higher than Microsoft’s and IBM’s at ~2.8% and ~3.7%, respectively, as of June 12. 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.

In the final part of our series, we’ll see what analysts are recommending for Symantec stock.

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