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FireEye (FEYE) Looks Promising: Should You Buy the Stock?
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Shares of FireEye Inc.’s have been on the rise since it reported splendid second-quarter 2017 results. The indicators of a stock’s bullish run include a rise in its share price and strong fundamentals.
Rising Share Price
FireEye has been clocking solid returns on a year-to-basis and has surged approximately 40.6%, outperforming the industry’s gain of 22.8%.
Upward Estimate Revisions
In the last 60 days, the Zacks Consensus Estimate for FireEye’s fiscal 2017 witnessed upward revisions. The Zacks Consensus Estimate for fiscal 2017 is currently pegged at a loss of 21 cents share compared with a loss of 29 cents projected 60 days ago.
Earnings Discussion
It seems that FireEye’s turnaround efforts such as product refreshes, acquisitions and cost optimization are paying off, as reflected from the company’s splendid second-quarter results, along with the overwhelming third-quarter and 2017 outlook. The cyber security solution provider’s second-quarter results not only fared better than our estimates, but also marked a significant year-over-year improvement.
Other Driving Factors
FireEye is a specialized provider of a security platform against cyber-attacks to enterprises and governments.
FireEye is currently focused on selling more subscription-based services. This business model generates recurring revenues that leads to stable revenues. Subscription-based services also generate higher margins for the company (approximately 80%) than the hardware-centric model. Notably, the company garners nearly 79% of total revenues (FY16) from these services, which has helped it to maintain gross margins above 60% over the last few quarters. We believe that the strategy will continue to boost the top and bottom line.
The company has been witnessing tremendous customer growth for its subscription-based services. We believe that continued focus on subscription-based products and services along with product upgrades will boost the top line.
FireEye pursues strategic acquisitions to drive growth. Its latest acquisitions include that of iSIGHT Partners during first-quarter 2016. We consider that the iSIGHT Partners buyout will prove to be a game changer for FireEye in the long run. The deal has beefed up FireEye’s cyber security suite and enhanced competitive dynamics. iSIGHT Partners invested nearly $100 million over the last eight years to build its cyber intelligence capability which can identify the source of the threat. The iSIGHT acquisition is just what FireEye needed, in our view. The buyout will strengthen the company’s current product line-up and offer an intelligence-led security model for enterprises of any size that other security providers will find difficult to match.
Additionally, the long-term EPS growth rate is currently an impressive 16%, suggesting pretty good prospects for the long haul. The company also delivered positive earnings surprises in the trailing four quarters with an average beat of 63.8%.
Bottom Line
Looking at these positives, we believe that FireEye is one technology stock that deserves a place in investors’ portfolio. Consequently, investing in this stock can yield returns in the short term.
Applied Materials, NVIDIA and Micron have a long-term expected EPS growth rate of 17.1%, 10.3% and 10%, respectively.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Image: Bigstock
FireEye (FEYE) Looks Promising: Should You Buy the Stock?
Shares of FireEye Inc.’s have been on the rise since it reported splendid second-quarter 2017 results. The indicators of a stock’s bullish run include a rise in its share price and strong fundamentals.
Rising Share Price
FireEye has been clocking solid returns on a year-to-basis and has surged approximately 40.6%, outperforming the industry’s gain of 22.8%.
Upward Estimate Revisions
In the last 60 days, the Zacks Consensus Estimate for FireEye’s fiscal 2017 witnessed upward revisions. The Zacks Consensus Estimate for fiscal 2017 is currently pegged at a loss of 21 cents share compared with a loss of 29 cents projected 60 days ago.
Earnings Discussion
It seems that FireEye’s turnaround efforts such as product refreshes, acquisitions and cost optimization are paying off, as reflected from the company’s splendid second-quarter results, along with the overwhelming third-quarter and 2017 outlook. The cyber security solution provider’s second-quarter results not only fared better than our estimates, but also marked a significant year-over-year improvement.
Other Driving Factors
FireEye is a specialized provider of a security platform against cyber-attacks to enterprises and governments.
FireEye is currently focused on selling more subscription-based services. This business model generates recurring revenues that leads to stable revenues. Subscription-based services also generate higher margins for the company (approximately 80%) than the hardware-centric model. Notably, the company garners nearly 79% of total revenues (FY16) from these services, which has helped it to maintain gross margins above 60% over the last few quarters. We believe that the strategy will continue to boost the top and bottom line.
The company has been witnessing tremendous customer growth for its subscription-based services. We believe that continued focus on subscription-based products and services along with product upgrades will boost the top line.
FireEye pursues strategic acquisitions to drive growth. Its latest acquisitions include that of iSIGHT Partners during first-quarter 2016. We consider that the iSIGHT Partners buyout will prove to be a game changer for FireEye in the long run. The deal has beefed up FireEye’s cyber security suite and enhanced competitive dynamics. iSIGHT Partners invested nearly $100 million over the last eight years to build its cyber intelligence capability which can identify the source of the threat. The iSIGHT acquisition is just what FireEye needed, in our view. The buyout will strengthen the company’s current product line-up and offer an intelligence-led security model for enterprises of any size that other security providers will find difficult to match.
Additionally, the long-term EPS growth rate is currently an impressive 16%, suggesting pretty good prospects for the long haul. The company also delivered positive earnings surprises in the trailing four quarters with an average beat of 63.8%.
Bottom Line
Looking at these positives, we believe that FireEye is one technology stock that deserves a place in investors’ portfolio. Consequently, investing in this stock can yield returns in the short term.
Zacks Rank & Other Picks
Currently, FireEye carries a Zacks Rank #2 (Buy).
Other top-ranked stocks in the broader technology sector include Applied Materials, Inc. (AMAT - Free Report) , NVIDIA Corporation (NVDA - Free Report) and Micron Technology, Inc. (MU - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Applied Materials, NVIDIA and Micron have a long-term expected EPS growth rate of 17.1%, 10.3% and 10%, respectively.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Download the new report now>>