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FireEye: Some Good Reasons To Buy The Stock

4:00 pm ET, 08 Feb 2018

Today after market close, Nvidia (NASDAQ: FEYE) is set to report its earnings for the last fiscal quarter.  According to Finstead Research, FireEye's price target upside is 17.83% (visit Finstead and type "FEYE upside"). 

Here are some good reasons to buy FEYE:

  • Rising cyber threats call for an increased security spend that would amount to ~$170 billion by 2020.
  • The MVX engine used by FireEye includes an exclusive hypervisor for the detection of malware threats, zero-day and advanced persistent threat (APT) attacks on a real-time basis.
  • The subscription-based cloud security services take preventive measures automatically when it comes to malware identification.  FaaS (FireEye-as-a-Service) has incorporated threat intelligence and analytics into the offering and also has a nice dashboard. 
  • Subscription-based products generate stable revenues for FireEye. They comprised 79% of the total and maintained a gross margin above 60% in the past few quarters.
  • The adoption of cost optimization helped FireEye reduce its operating expenses by $174 million. This resulted in an improvement of GAAP operating margin to -2% in the third quarter of 2017, as opposed to -14% in the third quarter of 2016.
  • The acquisition of iSIGHT Partners has enhanced FireEye's product line-up.  FireEye now offers a better intelligence-based security model to the enterprises.
  • FireEye continues to add customers (200 customers in each of the last 9 quarters).

Now, let’s look at the reasons to sell FEYE:

  • Despite its efforts through new product launches, acquisition, and cost optimization, no profit has been reported since FireEye has been listed on NASDAQ Stock Exchange, in September 2013.
  • Competitors' implementation of cybersecurity investment plans by breaking them into phases, makes FireEye’s near-term prospect less lucrative.
  • $14.6 million and $15.9 million negative operating cash flows in 2016 and first 3 quarters of 2017, respectively, continue to worry investors.
  • Strong competition from tech firms such as Cisco and Juniper is noticeable.  Those two firms, in particular, have a much larger sales force than FireEye.

Over the last year, FEYE returned +30.43%. This return is higher than Application Software industry (13.46%), Technology sector (14.82%), and S&P 500 (15.44%) returns.

FireEye, Inc. (FEYE) Stock Guide

Updated at: 3:45 pm ET, 12 Jan 2021

Before we start: if you're looking for FEYE stock price, you can quickly find it out by visiting Finny and typing "FEYE quote". If you're looking for a quick scoop on FEYE stock (chart, price target, market cap, news and buy or sell analysis), go to Finny and look for "FEYE". You'll get all this info in one place. Or you can just type "FEYE news" to get the latest stock news.

Looking to buy or sell FireEye, Inc. (FEYE)? Interested in getting the full scoop on FEYE, including earnings and dividends, stock forecast, buy or sell analysis and key stats? If so, you came to the right place.

In this FEYE stock guide, we'll address key questions about FEYE, above and beyond what you can find on Yahoo Finance, Zacks, MarketWatch or Morningstar.

Here is what you'll be able to find in this guide:

Earnings and Dividends: earnings, earnings date, dividend rate and dividend yield;
Analysis: Finny Score and buy or sell analysis;
Key Stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio, industry, sector, and number of employees.

And here is the list of questions we'll answer:
1. What are FEYE earnings?
2. When is FEYE earnings date?
3. FEYE buy or sell? What is FEYE Finny Score?
4. What are the reasons to buy FEYE? Why should I buy FEYE stock?
5. What are the reasons to sell FEYE? Why should I sell FEYE stock?
6. What are FEYE key stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

So let's start. Scroll down to the question that interests you the most.

Earnings and Dividends

1. What are FEYE earnings?

FEYE trailing 12-month earnings per share (EPS) is -$0.99.

2. When is FEYE earnings date?

FEYE earnings date is February 02, 2021.


3. FEYE buy or sell? What is FEYE Finny Score?

#{finnyScore:57}Our quantitative analysis shows 4 reasons to buy and 3 reasons to sell FEYE, resulting in Finny Score of 57.

4. What are the reasons to buy FEYE? Why should I buy FEYE stock?

Here are the reasons to buy FEYE stock:

  • The financial well being, brands and reputation of enterprises are always exposed to sophisticated cyber threats. Consequently, cyber security has become a mission- critical, high-profile requirement. According to a Markets and Markets report, worldwide cyber security spending will reach $101 billion in 2018 and $170 billion by 2020.
  • Exponential growth in the amount of data, complexity of data formats and the need to boost resources at regular intervals has led to a surge in demand for cloud computing software and applications. This trend has made it necessary for companies to enforce stricter data security measures. Given the industry’s trends, FireEye is currently focusing on cloud-based protection services.
  • FireEye is currently focused on selling more subscription-based services. This business model generates recurring revenue that leads to stable revenues. Moreover, it is more futuristic as companies increasingly move to the cloud, where the as-a-service model is common.
  • Despite of witnessing significant year-over-year top-line growth, FireEye has failed to impress investors with bottom-line results. Since it went public in September 2013, the company has not been able to report profits for even a single quarter. Therefore, since the beginning of first-quarter 2016, the company has been taking rigorous cost optimization initiatives, which include additional facilities closures, headcount reductions and minimization of discretionary spending.
  • FireEye pursues strategic acquisitions to drive growth. Most recently in January 2018, the company announced the acquisition of X15 Software with an aim to incorporate the latter’s Big Data platform to its security solutions against cyber attacks. X15 Software’s Big Data platform assists in collecting, retrieving and analyzing huge volumes of machine generated data in a scalable fashion in real time, per the press release. Hence, the buyout is anticipated to enhance FireEye’s abilities of managing security related data for better decision making, thereby helping its clients to counter the risks against them more effectively.
  • We consider that the January 2016 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 its 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. Post the acquisition, iSIGHT Partners will complement FireEye’s Mandiant business, acquired in late 2013.
  • FireEye is gaining customer accounts and increasing penetration of existing customers, which is driving revenue growth. During 2017, the company added 990 customers, bringing the total count to over 6,600 in 67 countries. It should be noted that in each of the last nine quarters, FireEye has added at least 200 customers.
  • FEYE quarterly revenue growth was 5.60%, higher than the industry and sector average revenue growth (1.19% and 0.53%, respectively). See FEYE revenue growth chart.
  • FEYE profitability is improving. The YoY profit margin change was 26.80 percentage points. See FEYE profitability chart.
  • FEYE PEG ratio (P/E adjusted for growth) is 0.87, which is low compared to its industry peers’ PEG ratios. See FEYE PEG chart.
  • FEYE cash to debt ratio is 0.92, higher than the average industry (0.16) and sector (0.17) cash to debt ratio. See FEYE cash to debt chart.

5. What are the reasons to sell FEYE? Why should I sell FEYE stock?

Let's look at the reasons to sell FEYE stock (i.e., the bear case):

  • Shorter-length contracts remain a major concern for FireEye’s near-term top-line growth. It should be noted that the average contract length has declined to 24 months in fourth-quarter 2017 from over 36 months in 2016. Although there is an advantage to the shorter-length contracts as these generally generate higher margins compared with three-year contracts, however, these adversely impact near-term top-line performances.
  • FireEye faces stiff competition from several big and small players in the security application market. Further, over the past few years, demand for IT security has been on the rise driven by increasing awareness and cyber attacks, making the market more attractive for new players. Also, there are some established players in adjacent markets like Cisco and Juniper that can cross-sell security products and include security into their existing product lines, further intensifying competition in the space.
  • FEYE stock price ($23.31) is close to the 52-week high ($25.12). Perhaps now is a good time to sell? See FEYE price chart.
  • FEYE short share of float is 10.67%. The stock is much more frequently shorted than the average industry, sector or S&P 500 stock. See FEYE short share of float chart.
  • FEYE short interest (days to cover the shorts) ratio is 4.57. The stock garners more short interest than the average industry, sector or S&P 500 stock. See FEYE short interest ratio chart.

Key Stats

6. What are FEYE key stats : revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

Let's look at the key statistics for FEYE:

Metrics FEYE
Price $22.15
Average Price Target / Upside N/A
Average Analyst Rating N/A
Forward Dividend Yield 0.00%
Industry Software - Application
Sector Technology
Number of Employees 3,200
Market Cap $5.24B
Forward P/E Ratio 62.06
Price/Book Ratio 5.64
Revenue (TTM) $928.17M
YoY Quarterly Revenue Growth 5.60%
Profit Margin -23.48%

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