Cyberattacks have been on the rise since last year and currently pose one of the greatest threats to the digital transformation of industries worldwide. From the Colonial Pipeline attack earlier this year to the ransomware attack on more than 200 U.S. companies in July and the 2020 U.S. federal government data breach, the increasing need for cybersecurity is clearer than ever.
Amid such developments, on July 28, President Biden announced the National Security Memorandum on Improving Cybersecurity for Critical Infrastructure Control Systems. The global cybersecurity market is projected to grow at a 10.9% CAGR over the next seven years.
Thus, fundamentally sound cybersecurity companies NortonLifeLock Inc. (NLOK), McAfee Corp. (MCFE), Trend Micro Incorporated (TMICY), and Radware Ltd. (RDWR) are expected to exhibit steady growth. As such, we believe investors looking to cash in on the industry’s solid growth prospects could bet on these stocks now.
Click here to checkout our Cybersecurity Industry Report for 2021
NortonLifeLock Inc. (NLOK)
NLOK is a consumer cybersecurity solutions provider. The company’s services are designed to maximize user productivity and ensure secure operations. Its popular software solutions are Norton 360, Norton Secure VPN, LifeLock Identity Theft Protection, and Avira Security. NLOK is based in Mountain View, Calif.
NLOK’s net sales increased 11.7% year-over-year to $686 million in its fiscal first quarter, ended July 2. This can be attributed to a 12% rise in bookings and a 12.7% rise in direct customer count. Its net income came in at $181 million, up 53.4% from the same period a year ago. Its EPS increased 29.2% from the prior-year quarter to $0.31.
On July 26, the Business Intelligence Group recognized NLOK as one of the top medium-sized companies for sales and marketing technology innovation in 2021.
NLOK partnered with Lenovo in late July to pre-install the Norton Security Universal Windows Platform app on certain Lenovo PCs. Regarding this, NLOK CEO Robert Clarkson said, “Through our collaboration, we’re able to secure the next generation of technology, and further protect consumers’ digital lives.”
In its quarterly Consumer Cyber Safety Pulse Report, NLOK reported that it prevented approximately 23.70 million phishing attempts between April and June 2021 and blocked 909 million cyber safety threats. This reflects NLOK’s efficiency in the cybersecurity space.
A $695.36 million consensus revenue estimate for the current quarter, ending September 2021, indicates an 11.1% improvement year-over-year. Analysts expect NLOK’s EPS to come in at $0.42 in its fiscal second quarter, indicating a 16.7% rise year-over-year. The company has an impressive earnings surprise history; it beat the Street’s EPS estimates in each of the trailing four quarters. Shares of NLOK have gained 8.3% over the past year and 15.5% year-to-date.
NLOK has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has a grade of A for Quality, and B for Value. Of the 26 stocks in the Software - Security industry, NLOK is ranked #2.
Beyond what we’ve stated above, we have rated NLOK for Sentiment, Momentum, Growth, and Stability. Get all NLOK ratings here.
Click here to check out our Software Industry Report for 2021
McAfee Corp. (MCFE)
Cybersecurity solutions provider MCFE operates in two segments—Consumer and Enterprise. The Santa Clara, Calif., company sells its products and services to small- and medium-sized businesses, large-cap companies, governments, and directly to consumers internationally, with an international market presence. The company made its stock market debut on October 26, 2020, by listing 37 million shares on the Nasdaq stock exchange at $20 per share.
In the first quarter, ended March 27, 2021, MCFE’s net revenue rose 24.9 % year-over-year to $442 million. This can be attributed to a 20% rise in core direct to consumer (DTC) subscribers. Its net income stood at $94 million, up 944.4% from its year-ago value. Its net cash from operating activities increased 51% from the same period last year to $259 million.
On July 27, MCFE sold certain assets and liabilities of its enterprise business to Symphony Technology Group for $4 billion. This divestiture is aligned with the company’s aim of focusing on its consumer business to emerge as a leading pure-play consumer cybersecurity company. MCFE plans to repay $1 billion of debt using the proceeds from this sale. Also, it announced a special one-time $4.50 cash dividend per class A share (to be paid on August 27) funded through divestiture proceeds.
Analysts expect MCFE’s revenues to rise 11.3% year-over-year to $1.99 billion next year. A $1.08 consensus EPS estimate for its fiscal year 2022 indicates a 35% rise year-over-year. The stock has gained 83.6% year-to-date to close Friday’s trading session at $30.64.
MCFE’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which equates to Buy in our proprietary rating system. In addition, it has a B grade for Value and Quality. The stock is ranked #3 in the Software - Security industry.
Click here to access all MCFE’s grades (Growth, Momentum, Stability, and Sentiment).
Click here to check out our Software Industry Report for 2021
Trend Micro Incorporated (TMICY)
Headquartered in Tokyo, Japan, TMICY develops and sells security-related software internationally. The company’s main software offerings include hybrid cloud security solutions, SaaS application security, and user protection solutions.
TMICY’s net sales increased 5.9% year-over-year to ¥44.59 billion ($40.44 million) in its fiscal first quarter, ended March 31. Its enterprise subscription-based annual recurring revenue rose 21% year-over-year, while subscription-based offering increased 17% from the prior-year quarter. Its operating income rose 20.8% from the same period last year to ¥12.22 billion ($11.08 million), while its ordinary income rose marginally from its year-ago value to ¥12.13 billion ($11 million).
Forrester Consulting forecasts TMICY Trend Micro Cloud One platform ROI to rise 188% over the next three years. Its total contribution is expected to be in the range of $664,000 - $1.70 million.
TMICY won the 2021 Amazon.com, Inc.’s (AMZN) Amazon Web Services Global Partner of the Year (ASEAN) award in the Independent Software Vendor category on July 26. In addition, it was recognized as a “Champion” in the Canalys Global Cybersecurity Leadership Matrix in the same month for the second consecutive year. These honors reflect the company’s leadership in the cybersecurity industry.
TMICY expects its revenues to increase 5.4% year-over-year to ¥183.40 billion ($166.35 million) in its fiscal year 2021. It projects ordinary income to come in at ¥41.20 ($37.37 million) billion this year, reflecting a 3.4% rise from the same period last year. Shares of TMICY have gained 8.5% over the past three months.
TMICY’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. In addition, the stock has an A grade for Quality and Stability. Also, it is ranked #4 in the Software – Security industry.
Beyond what we’ve stated above, we have rated TMICY for Sentiment, Momentum, Value, and Growth. Get all TMICY ratings here.
Click here to check out our Software Industry Report for 2021
Radware Ltd. (RDWR)
RDWR is an Israeli cybersecurity and application delivery solutions provider. With an international market presence, the company’s supply chain constitutes independent distributors, original equipment manufacturers, and system integrators.
RDWR’s revenues came in at a record $69.67 million in its fiscal second quarter ended June 30, up 19.2% year-over-year. Its non-GAAP operating income improved 106% from the prior-year quarter to $8.80 million. And its net income and EPS increased 573.4% and 900%, respectively, year-over-year to $4.53 million and $0.10.
On August 3, RDWR extended its partnership with leading secure hybrid infrastructure solutions provider INAP to deploy RDWR’s Cloud WAF and DDoS Protection Services to companies worldwide. This combined offering should provide enterprise-grade solutions to companies globally.
The Street expects RDWR’s revenues and EPS to rise 9.2% and 12.5%, respectively, year-over-year to $272.93 million and $0.75 in its fiscal year 2021. Furthermore, the company surpassed consensus EPS estimates in three out of the trailing four quarters. The stock has gained 23 % year-over-year and 15.6% year-to-date.
RDWR has an overall A rating, which equates to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Quality and Growth, and a B for Stability. Also, RDWR is ranked #1 in the Software – Security industry. To see more of RDWR’s component grades, click here.
Click here to checkout our Cybersecurity Industry Report for 2021
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NLOK shares were trading at $24.15 per share on Monday morning, up $0.16 (+0.67%). Year-to-date, NLOK has gained 17.44%, versus a 18.99% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditi Ganguly
Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities.
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