Gauging FireEye’s Value Proposition in the Cybersecurity Space



FireEye’s scale in the cybersecurity space

On November 29, 2017, Cisco Systems (CSCO), with its market capitalization of ~$185 billion, continued to be the largest global player in the security space—followed by Symantec (SYMC), which has a market cap of ~$18 billion.

Check Point Software Technologies (CHKP), with its market cap of ~$17.3 billion, is rapidly catching up with Symantec in this space. Palo Alto Networks (PANW) has seen a significant enhancement in its market cap, after posting better than expected fiscal 1Q18 results. Fortinet, Proofpoint, and FireEye’s (FEYE) join Cisco at the top of the cybersecurity space list.

FireEye’s enterprise value multiples

FireEye has a negative EBITDA (earnings before interest, tax, depreciation, and amortization), and so we can’t include its EV (enterprise value) multiple here.

The forward EV-to-EBITDA multiple for Palo Alto Networks most recently stood at ~23.57x. Cisco Systems had a multiple of ~8.9x, while Fortinet had a multiple of 19.7x on November 29, 2017.

FireEye’s dividend yield

Most companies in the cybersecurity space are relatively new, and so most of them don’t pay dividends—FireEye, Palo Alto Networks, and Fortinet included.

Cisco Systems’ forward annual dividend yield was ~3.1% on November 29, 2017, which was higher than Symantec’s forward annual dividend yield of ~1.04%.

Investors interested in gaining exposure to FireEye and the overall cybersecurity space might consider in the PureFunds ISE Cyber Security ETF (HACK). HACK has a portfolio of 32 stocks and invests ~5% of its holdings in FireEye.

Continue to the next and final part of this series for a look at the analyst recommendations for FireEye and its peers.

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