Despite Sales Growth, NortonLifeLock Stock Has Failed To Outperform The S&P- Here’s Why

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NortonLifeLock

NortonLifeLock Inc. (NASDAQ: NLOK) stock price dropped 14% from $28 in 2017 end, to around $24 currently, primarily due to unfavorable changes in its P/S multiple. The company actually witnessed a steady rise in revenue per share over this period, helped by a rise in sales and a drop in the outstanding share count. Despite this, the stock has failed to outperform the S&P, which has risen more than 55% in comparison over this period.

In our interactive dashboard, Why NortonLifeLock Stock Moved: NLOK Stock Has Lost 14% Since 2017, we break down the factors behind this move.

(A) NortonLifeLock’s Total Revenue has grown 9% from $2.6 billion in FY 2018 to $2.8 billion currently

  • NLOK’s total revenue has risen steadily from $2.6 billion in FY ’18 to $2.8 billion in FY ’22 (NLOK’s fiscal year ends in March), and currently stands at around the same level.
  • As of FY ’22, around 60% of NLOK’s sales come from its consumer security segment, which brought in $1.67 billion in FY ’22
  • Identity and Information protection sales make up the remaining 40%, bringing in $1.13 billion in FY ’22.
  • For details about NortonLifeLock revenues and comparison to peers, see NortonLifeLock (NLOK) Revenue Comparison
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(B) Revenue per share (RPS) increased 18% from $4.16 in FY ’18 to $4.89 currently

  • NLOK revenue rose from $2.6 billion in FY ’18 to $2.8 billion currently, while the outstanding share count decreased from 615 million in FY ’18 to 571.4 million currently.
  • Due to this, RPS has risen from $4.16 in FY ’18 to $4.89 currently.

(C) Price-To-Sales (P/S) multiple for NortonLifeLock dropped from 6.3x in 2017-end to 4.8x by 2020 end, and currently stands at around the same level

  • Despite NLOK’s steady performance since 2017-end, its P/S multiple has dropped from 6.3x in 2017-end to as low as 4.8x by late 2020.
  • While the P/S multiple recovered in 2021, due to the current increased economic uncertainty weighing on the broader markets, it has pulled back again, currently standing at around 4.9x.
  • For additional details about the company’s stock returns and comparison to peers, see NortonLifeLock (NLOK) Stock Return Comparison.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Aug 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 NLOK Return -1% -7% 1%
 S&P 500 Return 3% -10% 91%
 Trefis Multi-Strategy Portfolio 7% -7% 265%

[1] Month-to-date and year-to-date as of 8/12/2022
[2] Cumulative total returns since the end of 2016

 

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