SYMANTEC CORP. $24 (Nasdaq symbol SYMC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 690.3 million; Market cap: $16.6 billion; Price-to-sales ratio: 2.5; Dividend yield: 2.5%; TSINetwork Rating: Average; www.symantec.com) sells antivirus software and other computer security services.
Home Depot (New York symbol HD) recently hired Symantec and another firm to help investigate a major data breach. Online intruders secretly installed software on Home Depot’s systems that let them steal about 56 million credit card numbers and related data, but not personal identification numbers for debit cards.
Symantec has been trying to expand in the fast-growing cyber-security software/services market, and this contract will give it a lot of industry credibility.
Meanwhile, the company earned $313 million in its fiscal 2015 first quarter, which ended July 4,2014. That’s up 0.6% from $311 million a year earlier. Per-share earnings gained 2.3%, to $0.45
from $0.44, on fewer shares outstanding. Revenue rose 1.5%, to $1.74 billion from $1.71 billion.
The gains were mainly due to savings from a new restructuring plan that includes job cuts and simplifying product lines. In addition, Symantec split its salesforce into two groups: one focuses on winning new clients, and the other serves existing customers.
The stock trades at 14.2 times the $1.69 a share that Symantec will probably earn in fiscal 2015. That’s a particularly low p/e ratio for a company that spends a high 18% of its revenue on research.
The company also feels that higher revenue and cost savings will increase its gross profit margin (gross profits as a percentage of revenue) from 24.6% in the latest quarter to at least 30% in the fourth quarter of fiscal 2015. That would give it room to raise its dividend. The current annual rate of $0.60 a share yields 2.5%.
Symantec is a buy.
