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Symantec’s Value Proposition in the Cybersecurity Space

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Symantec’s scale in the cybersecurity space

So far in this series, we’ve looked at Symantec’s (SYMC) performance in fiscal 2Q18. We’ve discussed its segment-wise performance and factors that could boost its prospects in the rapidly growing cybersecurity space. In this part, we’ll compare Symantec’s value proposition with peers’.

On November 27, 2017, Cisco Systems (CSCO), with a market capitalization of ~$180 billion, continued to be the largest player in the global cybersecurity space. Symantec and Check Point Software Technologies (CHKP) placed second and third, with a market capitalization of $17.7 billion and $17.3 billion, respectively. Palo Alto Networks (PANW), Fortinet (FTNT), and FireEye (FEYE) are some other prominent players in the cybersecurity space.

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Symantec’s enterprise value

EV (enterprise value) is essentially a company’s takeover price. If a company is acquired, the acquirer must pay the target’s shareholders and bondholders, which is why equity and debt are both used to calculate EV. EBITDA (earnings before interest, tax, depreciation, and amortization) are considered in the technology industry as they are capital-structure neutral and not affected by accounting policy differences related to D&A (depreciation and amortization).

Symantec was trading at a forward EV-to-EBITDA multiple of ~9.5x on November 27, 2017. This metric was lower than FireEye’s multiple of ~30.5x but higher than Cisco’s multiple of ~8.6x. Palo Alto’s and Fortinet’s EV-to-EBITDA multiples were 23.5x and 19.6X, respectively.

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