Computer security firm RSA Security
Why the slower-than-expected uptake? It seems that RSA Security's product improvements have either substantially lagged competitors' (given competitors' positive earnings outlook), or its current technology solution does not offer significant improvements to existing software packages -- in other words, giving customers no need to upgrade.
Multiple brokerage firms used the news to downgrade the stock, which fell to a new low, 18% below its previous 52-week one, to $11.60 a share on Tuesday. In the up-and-down trading life of this company, the trend is down once again.
How bad is it? The company says, "This slowdown occurred across the company's software product lines in both the Americas and Europe." That's not particularly encouraging when competitors Check Point
The news for the hot authentication software business was not as dire, with RSA Security saying, "... the volume of authentication credentials licensed during the first quarter was similar to the prior quarter and increased year-over-year. In addition, pricing of authentication credentials remained consistent with prior periods."
It was only last December that the company released a consumer study that said consumers were afraid to conduct business online because of security concerns. The message: You need RSA Security's software.
RSA Security has a beautiful balance sheet, with no debt and $290 million in cash. Its authentication product is a critical piece of the company's future, but, for now, it looks like product sales have hit a plateau, if only a temporary one. Until the company re-establishes sales and earnings growth, the stock's price, at 24 times trailing earnings, looks fairly valued to me.
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