Symantec pre-released earnings today that were lower than expectations. Bookings were inline but revenues and earnings disappointed. The difference between the inline bookings and lower revenues was that a larger portion of bookings were recognized as deferred revenue. Free cash flow was roughly inline. It seems like the coming quarter will look like the past quarter as well with more revenue being booked as deferred revenue. This will create lower earnings but free cash flow should be closer to estimates.
Symantec did not release full earnings results but the company did give enough information to make some estimates. Symantec is now trading with an enterprise value of roughly $10.4 billion. The free cash flow for the year that just ended was roughly $1.63 billion dollars. The stock is trading at about 6.4 times free cash flow.
The drop in Symantec seems like an over reaction to me given that free cash flow was inline and will likely stay strong. This is about as cheap as I have ever seen a large cap stock trade that that did not have existential issues. I have greatly increased my position in Symantec today.