Symantec Second Quarter Earnings Preview

Symantec (Nasdaq:SYMC) will announce its second quarter earnings on Wednesday, October 24, 2012. The company's stock price has climbed 32.5% over the last three months to close at $17.77 on October 18, 2012.



Earnings play an important role in measuring the appropriate valuation for a stock. Investors should be cautious if the company's stock price is high but it consistently has low earnings. SEE: 5 Tricks Companies Use During Earnings Season

What to Expect: Analysts anticipate that Symantec will report earnings of 34 cents per share, matching that number from a year ago.

While down from 36 cents three months ago, the consensus estimate has remained unchanged over the past 30 days. For the fiscal year, analysts are expecting earnings of $1.46 per share.

Symantec is expected to report revenue of $1.66 billion for the quarter, down by 1.2% from last year's figure of $1.68 billion. For the fiscal year, expected revenue is $6.78 billion.



Company Performance: In the past four quarters, revenue has shown consistent growth. It increased 0.9% to $1.67 billion in the first quarter. Prior to that, the figure rose 0.5% in the fourth quarter of the last fiscal year, 6.9% in the third quarter of the last fiscal year and 13.6% in the second quarter of the last fiscal year.

Compared to the industry average of 0.43, SYMC's P/E ratio of 11.5 is quite high. A company with a high P/E ratio will eventually have to live up to the high rating by substantially increasing its earnings, or the price will need to drop. The P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: Understanding The P/E Ratio



September 6, 2012 to October 9, 2012 marked one of Symantec's worst periods, as the share price fell $1.29.





The Competition: Symantec provides security, storage and systems management solutions to help businesses and consumers secure and manage their information. The majority of analysts (15 of 27) give Symantec a buy rating. The rating has remained steadfast for the past three months.

The company's closest competitor in the software and programming industry is Microsoft (MSFT). Analysts are more optimistic about Symantec than about Microsoft. Only 20 out of 30 analysts rate the latter a buy.