FireEye (FEYE) Stock Rises in After-Hours Trading Ahead of Earnings Release

FireEye (FEYE) shares are climbing in after-hours trading ahead of the release of the company's third quarter earnings results.
By Tony Owusu ,

NEW YORK (TheStreet) -- Shares of FireEye (FEYE) - Get Report are up by 0.17% to $28.98 in after-hours trading on Tuesday, ahead of the release of the company's third quarter earnings results tomorrow afternoon.

Earlier this year, the Milpitas, CA-based cyber security company issued third quarter revenue guidance between $164 million and $168 million with a net loss expectation between 44 cents and 48 cents per share.

Analysts on average are expecting the company to post a loss of 45 cents per share on revenue of $167.1 million for the quarter.

For the year, the company expects to generate between $630 million and $645 million in revenue.

Separately, TheStreet Ratings team rates FIREEYE INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

We rate FIREEYE INC (FEYE) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, deteriorating net income, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Software industry and the overall market, FIREEYE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, FEYE has underperformed the S&P 500 Index, declining 17.57% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Software industry average. The net income has decreased by 14.3% when compared to the same quarter one year ago, dropping from -$116.82 million to -$133.57 million.
  • FIREEYE INC's earnings per share declined by 6.1% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, FIREEYE INC reported poor results of -$3.13 versus -$0.45 in the prior year. This year, the market expects an improvement in earnings (-$1.73 versus -$3.13).
  • Despite currently having a low debt-to-equity ratio of 0.58, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.71 is very high and demonstrates very strong liquidity.
  • You can view the full analysis from the report here: FEYE
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