FireEye Q3 Earnings: Is NasdaqGS:FEYE Expensive at 55.8x Forward P/E?

in EARNINGS/INVESTING IDEAS by

FireEye, Inc. (NasdaqGS:FEYE) is scheduled to report Q3 earnings results after markets close for trading on October 27, 2020.

The company is expected to report earnings of $0.07/share on revenue of $227.7 million. The consensus earnings per share (EPS) of $0.07/share is based on a poll of 18 analysts and represents a growth in eps of 258.5% over the same quarter last year, when the company reported earnings of $0.02/share.

The revenue forecast of $227.7 million based on a poll of 15 analysts implies a year-over-year (YoY) growth in revenue of 0.8%. Last year the company reported $225.9 million in revenue for the quarter.

Expected to report EPS growth of 258.5% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $227.66 $225.91 0.8%
EPS $0.07 $0.02 258.5%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, missed 1 quarter, and met expectations 1 quarter.

What are your expectations from FireEye, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 -$0.02 $0.09 583.6% Beat
Q1, 2020 -$0.04 -$0.02 51.5% Beat
Q4, 2019 $0.04 $0.07 81.4% Beat
Q3, 2019 $0.01 $0.02 107.9% Beat
Q2, 2019 $0.01 -$0.01 215.3% Missed
Q1, 2019 -$0.03 -$0.03 0% Met
Q4, 2018 $0.05 $0.06 15.4% Beat
Q3, 2018 $0.02 $0.06 183.7% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 19.8%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 28, 2020 $13.22 $15.84 19.8% Increase
April 28, 2020 $11.52 $11.04 −4.2% Decline
February 5, 2020 $16.04 $15.71 −2.1% Decline
October 29, 2019 $16.24 $15.39 −5.2% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.01, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.01 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

FireEye, Inc. is currently trading at $14/share, down −0.1% for the day. The company is trading at approximately 76.3% of its 52-week high of $18.34/share. The company’s stock price is down −11.6% since the last earnings report and down −0.2% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 60.59 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:FEYE Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −12.82 and a forward P/E multiple of 55.79.

FireEye, Inc.’s current share price also implies a price-to-book (P/B) multiple of 4.74. The following table summarizes some other key fundamental ratios:

Data as of October 21, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $14
P/E Ratio −12.8x
P/E Ratio (Fwd) 55.8x
PEG Ratio −1.7
Total Debt / Total Capital 24.6%
Levered Free Cash Flow $13.326 million
EV / EBITDA −41.6x

Finbox

FireEye, Inc. is a mid-cap stock with a market capitalization of $3.132 billion and a total enterprise value of $3.24 billion. The company operates in the Information Technology sector and the Software industry.

FireEye, Inc. provides cybersecurity solutions to prepare for, prevent, investigate, respond to, and remediate cyber-attacks in organizations. The company provides network, email, endpoint, and cloud security solutions, as well as customer support and maintenance services. It also offers Helix Security Platform, a cloud-hosted security platform; Security Validation Platform against cyber attacks; Dynamic Threat Intelligence cloud, a bi-directional cloud-based service; and Mandiant Threat Intelligence that offers subscriptions to threat intelligence reports to organizations for defending cyber threats. In addition, the company offers Mandiant Managed Defense, a technology-enabled managed detection and response service; Mandiant Digital Threat Monitoring, which analyzes content on the open and dark web for credential leakage, public data exposure, and other potential threats; and Mandiant Expertise-on-Demand, a prepaid subscription that provides access to the company’s threat intelligence and expertise as microservices. Further, it provides incident response, response readiness and cyber insurance assessments, red and purple team assessments, and other strategic security services; cyber threat intelligence and defense center services; and education services. The company serves telecommunications providers, financial services entities, Internet search engines, social networking sites, stock exchanges, electrical grid operators, networking vendors, oil and gas companies, healthcare and pharmaceutical companies, and governmental agencies. FireEye, Inc. offers its products and services through distributors, resellers, and strategic partners in the United States, the Asia Pacific, Europe, the Middle East, Africa, and Japan. FireEye, Inc. has strategic partnership with Athena Alliance. The company was formerly known as NetForts, Inc. and changed its name to FireEye, Inc. in September 2005. FireEye, Inc. was founded in 2004 and is headquartered in Milpitas, California.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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