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FireEye’s EV-to-EBITDA Multiple Compared to Its Peers

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FireEye’s EV-to-EBITDA ratio

EV-to-EBITDA[1. enterprise value to earnings before interest, taxes, depreciation, and amortization] multiples are widely used in the valuation of companies across various sectors. EV represents the market value of a company’s equity and debt, minus cash and cash equivalents. So, the EV-to-EBITDA ratio helps us determine whether a company is undervalued or overvalued.

In this article, we’ll look at FireEye’s (FEYE) EV-to-EBITDA multiple. We’ll also look at other US cybersecurity players. FireEye has a negative EBITDA, which is why we haven’t included it here. 

The forward EV-to-EBITDA multiples for FireEye’s peers follow: 

According to ProfitConfidential and as the chart above shows, FireEye tops the list of cybersecurity stocks to watch in 2017. Palo Alto Networks, CyberArk Software, Fortinet, and Symantec (SYMC) were other cybersecurity stocks featured in this list.

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FireEye’s dividend yield

Cisco Systems’ (CSCO) forward annual dividend yield was ~3.4% on May 9, 2017. Because most of the companies in the cybersecurity space are relatively new, many of them don’t pay dividends, including FireEye, Palo Alto Networks, and Fortinet.

Investors looking to gain exposure to the software space can consider investing in the PowerShares QQQ Trust, Series 1 ETF (QQQ), which invests ~27% of its holdings in the application software space.

In the final part of our series, we’ll see what kind of recommendations analysts are giving FireEye.

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