Shares of FireEye (NASDAQ:FEYE) rallied nearly 30% this year, fueled by a big earnings beat in May and indications that its newer cloud services are growing fast enough to offset softer sales of its on-site appliances. However, FireEye still remains well below its IPO price of $20, its sales growth is tepid (analysts expect just 2% growth this year), and it remains unprofitable by both GAAP and non-GAAP measures.

I'm not saying that FireEye can't turn things around, but I believe that there are better cybersecurity plays on the market today. Let's check out three stocks that fit the bill: CyberArk (NASDAQ:CYBR), Check Point (NASDAQ:CHKP) and Proofpoint (NASDAQ:PFPT).

Visual representation of privileged account protection.

Source: Getty.

CyberArk

One of FireEye's biggest flaws is its lack of GAAP profitability. Like many other cybersecurity companies, FireEye excludes stock-based compensation (SBC) expenses (which gobbled up 25% of its revenue last quarter) from its non-GAAP earnings.

Investors looking for a cybersecurity company that has lower SBC expenses and posts steady GAAP earnings growth should check out CyberArk. The Israeli company, which protects privileged accounts for nearly half of the Fortune 100 companies, posted 26% year-over-year sales growth and 75% GAAP earnings growth last quarter. SBC expenses accounted for just 9% of its revenue.

CyberArk's non-GAAP earnings, which exclude those expenses and gains from its recent acquisition of DevOps security software maker Conjur, rose 22%. Analysts expect CyberArk's revenue to rise 24% this year, but its non-GAAP earnings are expected to drop 4% on higher R&D and marketing expenses. But in my opinion, CyberArk still looks like a more compelling (and profitable) growth play than FireEye.

Check Point

CyberArk's Israeli peer Check Point -- which provides firewalls for over 100,000 businesses and millions of customers -- also posts stable GAAP profits and doesn't rely heavily on stock bonuses. Its revenue rose 8% annually last quarter, and its GAAP earnings grew 15%.

Its non-GAAP earnings improved 13%, and just 4% of its revenue was spent on SBC expenses. Like FireEye, Check Point is gradually pivoting away from on-site appliances toward software subscriptions. Revenue from those subscriptions, supported by its popular Sandblast platform, rose 27% annually and accounted for 26% of its top line last quarter.

Analysts expect Check Point's revenue and non-GAAP earnings to respectively grow 8% and 10% this year. Back in 2015, Check Point acquired fellow Israeli companies Hyperwise and Lacoon Mobile Security to widen its moat. It was also reportedly interested in buying CyberArk, but those talks fizzled out last year.

Proofpoint

Proofpoint provides a cloud-based security platform that detects and blocks threats from emails, mobile apps, and social media accounts. The company serves over half of the Fortune 100 and analyzes over 100 million email boxes, 200 million social media accounts, and seven million apps on a daily basis.

A man types e-mail.

Source: Getty.

Many of its services overlap with FireEye's offerings, but Proofpoint is growing at a much faster rate. Its revenue rose 43% annually last quarter, and it posted a non-GAAP profit of $0.12 -- compared to a net loss of $0.09 in the prior year quarter. Proofpoint remains unprofitable on a GAAP basis (partly due to SBC expenses consuming 20% of its revenue last quarter), but its losses have been narrowing. Wall Street expects Proofpoint's revenue to rise 33% this year, and for its non-GAAP earnings to surge 59%.

During last quarter's conference call, CEO Gary Steele attributed that growth to "ongoing demand for advanced threat solutions, continued high competitive win rates, robust new and add-on activity, excellent traction with our emerging products, and a world-class renewal rate that continues to exceed 90%."

But mind the valuations...

CyberArk, Check Point, and Proofpoint all have certain advantages against FireEye. But none of these stocks is cheap relative to its revenue growth. CyberArk trades at 8 times sales, Check Point trades at 11 times sales, and Proofpoint has a P/S ratio of 9.

Those ratios are much higher than FireEye's P/S of 3.5 and the industry average P/S of 6 for application software makers. This means that FireEye is fundamentally cheap, but it also indicates that investors are willing to pay higher premiums for its more promising peers.

 

Leo Sun has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Check Point Software Technologies. The Motley Fool recommends CyberArk Software and FireEye. The Motley Fool has a disclosure policy.