- United States
- /
- Software
- /
- NasdaqGS:GEN
Symantec Corporation (NASDAQ:SYMC): What Is Driving Earnings Margins?
Symantec's worrying earnings sentiment drives analysts to expect a material decline of -53.70% in the coming year, but it's necessary to take a moment and think through this appraisal. It is crucial for investors to do this, so they can judge the underlying components responsible for sparking this decline, as the return realised by shareholders may look different in the future if underlying assumptions are not realised. To get some insight, this article will interpret Symantec's margin performance to assist in analysing the revenue and cost anatomy behind the earnings expectations for the future and the impact it has on shareholder returns relative to the wider industry.
See our latest analysis for SymantecWhat does SYMC's profit margin tell us?
At a high level, a company’s ability to earn on their sales efforts can play an important role in determining shareholder value. By calculating SYMC's profit margin, we can take a closer look at this ability and use it to understand what is driving earnings growth.
Margin Calculation for SYMC
Profit Margin = Net Income ÷ Revenue
∴ Profit Margin = 1.01 Billion ÷ 4.74 Billion = 21.27%
The past five years have seen Symantec's margin contract, as a result of net income declining at -35.24% on average, which was more than the average fall in revenue of -10.33%, indicating that that the company's decline in the top line has also corresponded with a smaller portion flowing out as earnings. SYMC's most recent margin of 21.27% appears to follow this trend, which suggests that the decrease in net income has likely occurred from a combination of a lack of cost efficiency as well as a fall in the top line.
Using Symantec's margin expectations as a way to understand projections for the future
It is expected that margins will continue to contract, with annual revenue growth tipped at 2.48% and a -63.06% expected annual decline in net income. This suggests the future earnings decline is driven further by an increase in costs rather than a dramatic fall in revenue potential, which is squeezing the incremental amount of net income that is retained from the forecasted revenue increase. Despite this, investors should realise a contracting margin can mean different things for different companies, thus more detailed research is essential.
Next Steps:
For SYMC, I've compiled three important factors you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is SYMC worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether SYMC is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of SYMC? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
New: Manage All Your Stock Portfolios in One Place
We've created the ultimate portfolio companion for stock investors, and it's free.
• Connect an unlimited number of Portfolios and see your total in one currency
• Be alerted to new Warning Signs or Risks via email or mobile
• Track the Fair Value of your stocks
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
About NasdaqGS:GEN
Gen Digital
Engages in the provision of cyber safety solutions for or individuals, families, and small businesses.
Good value with proven track record.
Similar Companies
Market Insights
Community Narratives


