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Symantec’s Value Proposition in the US Software Space



Symantec’s scale in the cybersecurity space

So far in this series, we’ve covered Symantec’s (SYMC) fiscal 1Q18 results as well as its recent acquisitions. Now let’s look at its value proposition among select software companies in the US. Let’s start with Symantec’s size.

As of August 26, 2017, and as you can see in the chart below, Cisco Systems (CSCO) led the global security appliance market. It was also the largest player in the cybersecurity space by market capitalization.

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Cisco Systems was followed by Symantec, and Check Point Software Technologies (CHKP), Palo Alto Networks (PANW), and Fortinet (FTNT) round out the top five players in security appliance space. These companies are also prominent players in the software cybersecurity space. FireEye (FEYE)with distinct offerings such as Helix, is also making its presence felt in this rapidly growing space.
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Symantec’s enterprise value multiple

Let’s look at Symantec’s EV-to-EBITDA[1. enterprise value to earnings before interest, tax, depreciation, and amortization] multiple. Symantec was trading at a forward EV-to-EBITDA multiple of ~8.6x on August 26, 2017. This metric was higher than Cisco Systems’s multiple of ~6.8x but higher than PANW’s multiple of ~21.5x.

Symantec’s dividend yield

Symantec’s forward annual dividend yield was ~1.0% on August 26, 2017. Cisco Systems reported a lower dividend yield of ~3.8% on August 24. The rest of the players mentioned above do not pay dividends to their investors.

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

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


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