Continued digital transformation has led businesses to increase their budgets for cybersecurity, with cyber threats and data breaches increasing daily. Moreover, significant government investments to stay protected from cyberattacks amid the continued geopolitical crisis should drive the cybersecurity industry’s growth.
Although Federal Reserve’s interest rate hikes and recession concerns are weighing heavily on the tech industry, the increasing need for cybersecurity solutions should help cybersecurity companies perform well in the long run.
Investors’ interest in this space is evident from the First Trust Nasdaq CEA Cybersecurity ETF’s (CIBR) 2.4% returns over the past week. The global cyber security market is expected to grow at a 13.4% CAGR to reach $376.32 billion by 2029.
Radware Ltd. (RDWR)
Headquartered in Tel Aviv, Israel, RDWR provides cyber security and application delivery solutions for virtual, cloud, and software-defined data centers worldwide. The company sells its products primarily to independent distributors, including value-added resellers, original equipment manufacturers, and system integrators.
On July 20, 2022, RDWR introduced a new set of crypto mitigation algorithms inspired by blockchain methodologies to enhance its Bot Manager and help close security gaps that let sophisticated bots evade traditional CAPTCHA solutions to harm a website or application.
These algorithms create a new zero trust posture for publicly exposed web and API applications to keep malicious bot machines occupied, exhaust their resources and curb the bot master’s motivation to attack. This should witness high demand from organizations in the coming months.
For its fiscal 2022 first quarter ended March 31, 2022, RDWR’s revenues increased 10.4% year-over-year to $73.71 million. The company’s non-GAAP gross profit came in at $61.32 million, up 11.5% from the prior-year period. Its non-GAAP operating income came in at $9.61 million, representing a 28.4% rise from the year-ago period.
RDWR’s non-GAAP net income came in at $8.84 million, indicating a 10.2% year-over-year improvement. Its non-GAAP EPS came in at $0.19, representing an 11.7% rise from the prior-year period. The company had $54.48 million in cash and cash equivalents as of March 31, 2022.
Analysts expect RDWR’s revenue to come in at $311.54 million for its fiscal 2022 ending December 31, 2022, representing an 8.7% rise from the prior-year period. It surpassed Street EPS estimates in each of the trailing four quarters, which is impressive.
Its EPS is expected to grow at a rate of 15% per annum over the next five years. Over the past month, the stock has gained 5.3% to close the last trading session at $22.76.
RDWR’s POWR Ratings reflect this promising outlook. It has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has a B grade for Growth, Sentiment, and Quality. Click here to see the additional ratings for RDWR’s Value, Momentum, and Stability. RDWR is ranked #1 of 29 stocks in the Software – Security industry.
NortonLifeLock Inc. (NLOK)
NLOK is a software company that provides cyber security solutions to consumers worldwide. Its products and services enable users to protect their devices, online privacy, identity, and home networks. It sells its products and related services through retailers, telecom service providers, hardware OEMs, and e-commerce platforms.
For its fiscal 2022 fourth quarter ended April 1, 2022, NLOK’s revenues increased 6.6% year-over-year to $716 million. The company’s gross profit came in at $615 million, indicating a 7.3% year-over-year improvement. Its non-GAAP operating income came in at $391 million for the quarter, representing a 14.3% rise from the year-ago period.
While its non-GAAP net income increased 15.8% year-over-year to $271 million, its non-GAAP EPS grew 15% to $0.46. The company had $1.89 billion in cash and cash equivalents as of April 1, 2022.
Analysts expect NLOK’s EPS to be $1.81 for fiscal 2023 ending March 31, 2023, representing a 3.4% rise from the prior-year period. It surpassed Street EPS estimates in each of the trailing four quarters.
The consensus revenue estimate of $2.92 billion for the same fiscal year represents a 4.5% rise from the year-ago period. Its EPS is expected to grow at an 8.1% rate per annum over the next five years. Over the past week, the stock has gained 11.2% to close the last trading session at $24.77.
NLOK’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.
It has an A grade for Quality. Click here to see the additional ratings for NLOK (Growth, Momentum, Sentiment, Stability, and Value). NLOK is ranked #6 in the same industry.
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RDWR shares were trading at $22.81 per share on Tuesday afternoon, up $0.05 (+0.22%). Year-to-date, RDWR has declined -45.22%, versus a -13.20% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...
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