Symantec (SYMC): Cybersecurity for an Insecure World


The information security business accounts for 62% of Symantec’s revenues, divided evenly between consumer and business markets. Symantec claims to protect more than one billion systems, safeguards more than 135 million consumers with Norton security products, and has a large share of the Fortune 500 as customers. Though SYMC operates in intensely competitive markets, its large installed base of customers provides recurring revenue that is 87% of the company’s total revenues.
Symantec’s other primary business is information management (data storage), at 38% of total revenues. The information management business is expected to grow at a 7% annual rate.

Symantec is in a turnaround mode, as it historically had not managed its acquisitions well. SYMC replaced its CEO a year ago, and last October it announced plans to split the company into two publicly-traded companies: Symantec (information security) and Veritas Technologies Corp. (information storage and management). Though near-term results are constrained by foreign currency translation effects (like most large U.S. companies), recent results of management’s efforts are encouraging.
Symantec seems undervalued, and management’s restructuring of the company and efforts to improve profit margins should lead to better results. The split into two companies later this year should reveal the undervaluation of the company.
Symantec is a financially strong company operating in attractive areas of the technology sector, with strong cash flow, a new share buyback program, and a high ranking on our stock model.
Sustainability
The company is rated an “Industry Leader” by research firm Sustainalytics and is ranked 9th out of 171 peers. It has three women on its nine-member board, and aims to increase diversity at all levels by 15% by 2020. Symantec acknowledges that it has been challenged in developing a company-wide greenhouse gas reduction goal, but intends to announce one in FY2015. Its 2014 Corporate Responsibility report can be downloaded at http://www.symantec.com/corporate_responsibility/.

Symantec
Revenues: $6.68 billion
Market Capitalization: $17 billion
Earnings Per Share (EPS):
FY2015 est. $2.15
FY2016 est. $2.30
Projected 3-5 Year Annual Earnings Growth: 5%
Dividend Yield: 2.5%
Stock 52-week Low-High: $21.07-27.32
Risk: Average
Website: www.symantec.com