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Symantec: Now Is The Right Time to Include This Stock in Your Portfolio
Posted by: mitu77 (IP Logged)
Date: April 13, 2014 11:32PM
The market for IT services related to security is phenomenal as data is growing exponentially and security constraints are becoming more and more stringent for any user. Symantec (SYMC) is one such company that provides these services. The probable customer of the company can vary from a smartphone user to high-end data centers. Since security is important for users of all sizes, it lends a hand to influence the top and bottom lines of companies like Symantec.
Symantec primarily provides various solutions in five independent segments like storage & server management, services securities, consumers, and others. The stock price has dropped by 20% over the last 6 months, but this might be the right time for one to think of buying Symantec.
The company released its Q3 earnings earlier this year. Barring a dip in year over year revenue, various other financial metrics recorded growth. It reported revenue of $1.71 billion, signifying a 4.8% dip year over year. Despite this dip, it still managed to beat the consensus estimate by $0.05 billion.
An impressive bottom line recorded $358 million, a growth of 13% year over year. The company has also topped Wall Street's consensus view on earnings for seven consecutive quarters.
Markets that will benefit Symantec
Once known only as a maker of Norton antivirus, the company is now fully into software, focusing on various other growth areas. Cloud-based security is a segment where Symantec is looking for growth. This segment was globally worth $2.1 billion in 2013 and is projected to reach $3.1 billion by 2015.
The information service revenue did shrink, but is expected to grow for Symantec as it realigns its product portfolio by being more flexible. One of the reasons behind the revenue drop in this segment was due to declining PC sales. Symantec expects to offset this as it focuses on big data and data center markets in the future.
If further plans to broaden its horizon of service by not only limiting itself to datacenter, but now its focal point is also on protecting and managing digital information.
Storage management software, again, has huge potential with businesses moving to the cloud and data virtualization gaining steam. Analysts forecast this market to grow at a CAGR of 4.36% over the period of 2012-2016. Other major players in this segment are EMC, IBM, and NetApp that provide stiff competition to Symantec.
This market, as a whole, grew 4.7% in 2013 and reached $15.7 billion revenue. Considering the CAGR, we surely will witness stronger revenue by 2016. With European countries recovering, Symantec looks well-placed for the long run.
Dividend and repurchases
Repurchase programs and dividends are always good, and in the third quarter 2014, Symantec declared a dividend of $0.15 per share which amounted to a total of $104 million. It also implemented repurchase programs for 5.3 million shares at an average price of $23.76. It further plans to future repurchase programs that will amount to $783 million.
With the growing market for security products, Symantec looks like a good buy for the long run. So, investors should definitely consider this company for their portfolio.
Stocks Discussed: SYMC,