With businesses pressing ahead with digital transformation to stay ahead of their competition, and several companies preferring to continue working remotely via cloud-based platforms even in the wake of the COVID-19 pandemic, cybersecurity threats are rising. The SolarWinds hack last year, and the Colonial Pipeline cyberattack earlier this year highlighted the importance of advanced cybersecurity solutions.
President Biden signed an executive order last month to improve the nation’s cybersecurity. This boosted investors’ interest in cybersecurity stocks, as evidenced by the First Trust NASDAQ Cybersecurity ETF’s (CIBR) 6.7% gains over the past month versus the SPDR S&P 500 Trust ETF’s (SPY) 1.4% returns. Furthermore, according to a Facts and Factors report, the global Cyber Security Market is expected to grow at a 14.9% CAGR over the next five years.
McAfee Corp. (MCFE)
MCFE is one of the top players in the cybersecurity space. It operates through two segments: consumer and enterprise. Its security technologies enable home users and businesses to combat fileless attacks, viruses, malware, and other online threats. The company’s personal protection services include device security, online privacy and comprehensive Internet security, and identity protection.
MCFE’s net revenue for its fiscal first quarter ended March 27, 2021, increased 24.9% year-over-year to $442 million. The company’s net income for the quarter was $94 million, which represents a 944.4% year-over-year increase. Its adjusted EBITDA increased 25.2% year-over-year to $199 million. And its adjusted EPS for the quarter was $0.25.
Analysts expect MCFE’s EPS and revenue to increase 35% and 11.3%, respectively, year-over-year to $1.08 and $1.99 billion in 2022.
On May 18, MCFE announced its expansion of its MVISION Extended Detection and Response (XDR) solution. It has done so by correlating the extensive telemetry of its endpoint security solution, Secure Access Service Edge (SASE) solution, and threat intelligence solution powered by MVISION Insights. With growing cybersecurity threats, MCFE is expected to see increasing demand for its XDR solution because it delivers end-to-end threat visibility across all attack surfaces and can help significantly in containing a breach. Its stock has gained nearly 70% year-to-date to close yesterday’s trading session at $28.37.
MCFE’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has a B grade for Growth, Value and Quality. Click here to access MCFE’s ratings for Stability, Momentum and Sentiment as well.
MCFE is ranked #4 out of 24 stocks in the Software-Security industry.
Trend Micro Incorporated (TMICY)
Headquartered in Tokyo, Japan, TMICY develops and sells security-related software for computers and the Internet. The company provides user protection solutions, such as endpoint security, email and Web security, and SaaS application security. It operates through five geographical segments: Japan, North America, Europe, Asia Pacific, and Latin America.
For the first quarter ended March 31, 2021, TMICY’s net sales increased 5.9% year-over-year to $420 million. The company’s operating income increased 20.8% year-over-year to $115 million. Its ordinary income for the quarter was 12.13 billion Yen ($109.39 million) compared to 12.03 billion Yen ($108.49 million) in the prior-year quarter.
In its fiscal year 2021, TMICY’s revenue is expected to be $1.66 billion, which represents a 144.7% year-over-year rise.
On June 22, 2021, TMICY released a new study that revealed that its hybrid cloud security services can save thousands of person-hours per year on security administration. Forrester Consulting conducted the study and concluded that TMICY’s services can enhance developer value and save costs on breach risks, threat detection and response and legacy tooling. The stock has rallied 1.8% over the past three months to close yesterday’s trading session at $53.15.
TMICY’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. It also has an A grade for Stability, Value and Quality. In addition to these ratings, one can see TMICY’s ratings for Sentiment, Momentum and Growth here.
TMICY is ranked #3 in the Software-Security industry.
Tenable Holdings, Inc. (TENB)
Cybersecurity solutions provider TENB’s platforms include Tenable.io and Tenable.sc. The Columbia, Maryland company also provides Nessus Professional, which is a vulnerability assessment solution for identifying security vulnerabilities, configuration issues, and malware.
TENB’s $123.19 million in revenues for the first quarter ended March 31, 2021, represents a 20% year-over year rise. Its non-GAAP net income came in at $14.75 million compared to a $8.83 million loss in the prior-year quarter. The company’s non-GAAP EPS came in at $0.13 million compared to a $0.09 loss per share in the year-ago period.
In its fiscal year 2021, analysts expect TENB’s EPS and revenue to increase 42.1% and 18.7%, respectively, year-over-year to $0.27 and $522.63 million. Furthermore , it surpassed consensus EPS estimates in each of the trailing four quarters.
TENB completed the acquisition of Alsid SAS on April 26, 2021 and announced the availability of Tenable.ad on the same day. These strategic moves are expected to help the company deliver better solutions to security challenges that pose the greatest risk to its customers’ businesses. The stock has gained 44.2% over the past year to close yesterday’s trading session at $43.50.
It’s no surprise that TENB has an overall B rating, which equates to Buy in our POWR Ratings system. The stock has a B grade for Quality, Sentiment and Growth. Click here to see the additional POWR Ratings for TENB (Value, Momentum and Stability).
TENB is ranked #6 in the Software-Security industry.
MCFE shares were trading at $28.28 per share on Friday morning, down $0.09 (-0.32%). Year-to-date, MCFE has gained 71.01%, versus a 14.68% rise in the benchmark S&P 500 index during the same period.
About the Author: Ananyo Guha Niyogi
Ananyo’s ardent interest in capital markets, wealth management, and financial regulatory issues, led him to a career as an investment analyst. His goal is to educate individual investors by making complex financial issues easy to understand. More...
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