Forget IronNet, Buy These 3 Cybersecurity Stocks Instead The potential Federal Reserve interest rate hikes do not bode well for the technology sector. Indeed, cybersecurity stock IronNet (IRNT) looks overvalued at its current price level and could witness...
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The potential Federal Reserve interest rate hikes do not bode well for the technology sector. Indeed, cybersecurity stock IronNet (IRNT) looks overvalued at its current price level and could witness a downtrend. However, we think investors looking to cash in on the solid growth prospects of the cybersecurity industry could bet on quality stocks Check Point Software (CHKP), Trend Micro (TMICY), and Radware (RDWR) instead. Read on.
McLean, Va.-based cyber-attack solutions designer and developer, IronNet, Inc.'s (IRNT) revenue decreased 1.4% year-over-year to $6.91 million for its third fiscal quarter, ended Oct. 31, 2021. The company's net loss came in at $193.12 million, representing a 1,451.2% year-over-year increase, while its loss per share was $2.22, up 1,068.4% year-over-year. Furthermore, IRNT's trailing-12-month EBITDA margin and net income margin are currently negative.
The stock has declined 65.9% in price over the past year to close yesterday's trading session at $4.07. On Dec. 19, 2021, Pomerantz LLP announced its investigation on behalf of investors in IRNT regarding allegations of illegal business practices. Also, in terms of forward EV/S ratio, its 19.05x is 428.9% higher than the 3.60x industry average. In addition, its 11.98x forward P/S is 230.9% higher than the 3.62x industry average. So, the stock looks significantly overvalued.
However, the cybersecurity industry's prospects look bright. Extensive cloud computing dependence is compelling people to adopt advanced cyber security solutions to protect their data. And according to Market Watch, the cyber security market is slated to grow at an 11.9% CAGR through 2025.Therefore, we think investors looking to benefit from the industry's growth could bet on fundamentally strong cybersecurity stocks Check Point Software Technologies Ltd. (CHKP), Trend Micro Incorporated (TMICY), and Radware Ltd. (RDWR) instead.
Click here to checkout our Cybersecurity Industry Report for 2022
Check Point Software Technologies Ltd. (CHKP)
Headquartered in Tel Aviv, Israel, CHKP develops, markets, and supports a range of products and services for IT security worldwide. The company offers a portfolio of network security, endpoint security, data security, and management solutions.
On Feb. 3, 2022, Gil Shwed, Founder & CEO of CHKP, said, "We closed 2021 with strong financial results. This was the sixth consecutive quarter, with accelerated billings reaching 14 percent growth for the quarter. Our success continues to be driven by our Infinity platform's capabilities and the unique strengths of our key pillars: Check Point Quantum network security solutions, Check Point Harmony, and Check Point CloudGuard. We began 2022 with initiatives focused on driving growth."
CHKP's total revenues increased 6.3% year-over-year to $599.10 million for the fourth quarter, ended Dec. 31, 2021. Its product and security subscriptions increased 8.9% year-over-year to $370.50 million. And its products and licenses also increased 3.6% year-over-year to $166.40 million.
For its fiscal 2022, CHKP's revenue is expected to increase 5.7% year-over-year to $2.29 billion, and its EPS is expected to grow 10.4% to $7.99 in 2023. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 7.4% in price to close yesterday's trading session at $131.75.
CHKP has an overall B rating, which equates to a Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
It has an A grade for Quality and a B grade for Value. It is ranked #5 of 28 stocks in the Software - Security industry. Click here to see the additional POWR Ratings for CHKP (Momentum, Growth, Sentiment, and Stability).
Trend Micro Incorporated (TMICY)
Headquartered in Tokyo, Japan, TMICY develops and sells security-related software for computers and the Internet, primarily in Japan. The company offers several hybrid cloud security solutions.
For the nine months ended Sept. 30, 2021, TMICY's net sales increased 9.6% year-over-year to ¥139.18 billion ($1.20 billion). The company's operating income came in at ¥34.62 billion ($299.42 million), up 25.7% year-over-year, while its net income came in at ¥25.67 billion ($222 million), up 35.2% year-over-year.
TMICY's revenue is expected to come in at $1.80 billion in fiscal 2022, representing a 9.1% year-over-year rise. In addition, the company's EPS is expected to increase 12.1% per annum for the next five years. Over the past month, the stock has gained 3.7% in price to close yesterday's trading session at $52.56.
It is no surprise that TMICY has an overall A rating, which equates to a Strong Buy in our POWR Rating system. The stock has an A grade for Stability and Quality and a B grade for Value.
It is ranked #1 in the Software - Security industry. Click here to see the additional POWR Ratings for TMICY (Momentum, Growth, and Sentiment).
Radware Ltd. (RDWR)
Headquartered in Tel Aviv, Israel, RDWR and its subsidiaries develop, manufacture, and market cyber security and application delivery solutions for applications in physical, virtual, cloud, and software-defined data centers worldwide.
On Feb. 9, 2022, Roy Zisapel, president and CEO, RDWR, said, "In 2021, we witnessed an increased demand for our security solutions. The total addressable market is large and offers tremendous opportunities in the future. We believe that in light of the investments we are making in innovation and infrastructure, we are well-positioned to enjoy continued growth."
RDWR's revenues came in at $76.64 million, up 11% year-over-year, for the fourth quarter ended Dec. 31, 2021. Its gross profit was $62.59 million, up 10.1% year-over-year. Also, its operating income increased 24.9% year-over-year to $4.87 million.
Analysts expect RDWR's revenue and EPS to increase 9.6% and 16.5%, respectively, year-over-year to $341.11 million and $0.92. in fiscal 2023. It surpassed the consensus EPS estimates in three of the trailing four quarters. And over the past year, the stock has gained 20.8% in price to close yesterday's trading session at $32.29.
RDWR's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system.
It has an A grade for Quality and a B grade for Growth. Within the Software - Security industry, it is ranked #4. Click here to see the additional POWR Ratings for Value, Momentum, Sentiment, and Stability for RDWR.
Click here to checkout our Cybersecurity Industry Report for 2022
CHKP shares were trading at $131.18 per share on Wednesday morning, down $0.57 (-0.43%). Year-to-date, CHKP has gained 12.54%, versus a -6.46% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
The post Forget IronNet, Buy These 3 Cybersecurity Stocks Instead appeared first on StockNews.com
