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Why Symantec’s Valuation Is Compelling

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Symantec’s stock price movements

The stock of software giant Symantec (SYMC) has fallen nearly 20% since the beginning of May 2019, which has made it attractive on the valuation front. The stock has gained 2.8% year-to-date as of June 14, compared to the S&P 500, which has risen more than 15% in the same period.

Symantec reported weak sales in the Enterprise Security segment during the fourth quarter of fiscal 2019, and it’s also given weak profit signals for the upcoming quarter due to higher expenses in the Enterprise Security segment related to higher investments in the cloud business. Meanwhile, the company has plans to use its investments to grow its revenue in the Enterprise segment.

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Symantec’s valuation

Symantec’s near-term sales and profits are expected to see strong growth. Symantec stock is currently trading at 11.5x its fiscal 2020 (ending in March 2020) estimated EPS of $1.69 and 10.6x its fiscal 2021 (ending in March 2021) estimated EPS of $1.83, which is based on the projected growth rates of ~6.6% and ~8.2% for those periods.

Symantec’s revenues are also expected to rise 1.1% and 2.2%, respectively, in fiscals 2020 and 2021.

Analysts’ recommendations for Symantec

Of the 27 analysts tracking Symantec, only two have given the stock “buy” ratings, while three have given it “sells.” Twenty-two analysts have recommended “holds” on the stock. Analysts’ average target price on the stock is $20.61, indicating that it has a potential upside of 6.5% from its current level.

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