Symantec (SYMC) has fallen around 21.0% since the start of May. The stock is down over 17.0% since April this year, when we identified it as overvalued. Symantec stock had gained almost 28.0% in the first four months of this year and the stock is up just 1.3% since the start of 2019 as a result of this pullback.
Symantec shares are trading at $19.08, which is 23.0% below its 52-week high. SYMC stock has gained just over 2% annually in the last five years. Comparatively, its sales have fallen 6.6% while earnings have declined 3.7% annually in the last five years.
What drove Symantec stock lower last month?
Symantec announced its fourth quarter results (year ending in March) last month and reported sales of $1.195 billion, a fall of 2.2% YoY. Adjusted earnings per share were $0.39, a fall of 11.4% YoY. Wall Street estimated sales of $1.205 billion and EPS of $0.39 from Symantec.
Symantec blamed weak sales in the enterprise security segment for the revenue miss. The company estimated sales between $4.76 billion and $4.90 billion in 2020 with adjusted EPS between $1.65 and $1.80. Wall Street expected sales of $4.97 billion and EPS of $1.71 in fiscal 2020.
Further, CEO Greg Clark abruptly announced his resignation. A revenue miss in the fourth quarter, a lukewarm revenue estimate for fiscal 2020, and CEO resignation drove SYMC stock lower.
Is the stock undervalued?
SYMC stock is trading at a forward PE multiple of 10.3x. Comparatively, its earnings are estimated to rise by 7.5% this year and by 8.8% in 2021.
Its earnings are also expected to rise at a CAGR (compound annual growth rate) of 10.0% over the next five years. Symantec stock does not look too overvalued considering the PE multiple.
How does Wall Street view Symantec?
Out of the 29 analysts tracking Symantec, 11 recommend a “buy,” 16 recommend a “hold,” and two recommend a “sell.” The analysts have an average target price of $21.02, which indicates that the stock has an upside potential of 10.2% from current levels.