Tic-tac-toe, investors want to know: After two straight quarters of exceeding expectations for quarterly earnings, will Symantec (NASDAQ:SYMC) make it three in a row this quarter? The Internet security specialist reports its fiscal Q1 2008 numbers Wednesday afternoon.

What analysts say:
  

  • Buy, sell, or waffle? Thirty-two analysts monitor Symantec, giving the stock a dozen buy ratings, 17 holds, and three sells.
  • Revenues. On average, they're looking for 3% sales growth to $1.32 billion.
  • Earnings. Meanwhile, profits are predicted to slide 17% to $0.20 per share.

What management says:
If actions truly do speak louder than words, then consider what management told shareholders last month, when it dug out its wallet and anted up $2 billion (in authorizations, not promises) for share buybacks. Often, such announcements are used for PR value -- speaking the language of cash to voice management's opinion that business is good and its shares are undervalued. But after crunching the numbers, I came to the conclusion that this is one case where management's attempts to put its money where its mouth is are going to benefit shareholders. Comparing the valuations of rivals CA (NYSE:CA), McAfee (NYSE:MFE), Microsoft (NASDAQ:MSFT), and EMC (NYSE:EMC), I concluded that -- with the possible exception of McAfee -- Symantec's stock price looks the most "buyable" of the five.

What management does:

That said, to reach this conclusion, I needed first to do an end-run around traditional PEG analysis -- observing that from a pure GAAP perspective, "Symantec looks like no bargain." That caveat holds true with its margins under GAAP. Rolling gross margins are weaker today than they were a year ago. Likewise operating and net margins.

Margins

12/05

3/06

6/06

9/06

12/06

3/07

Gross

83.9%

83.9%

83.6%

83.7%

83.4%

83.5%

Op.

18.9%

15.5%

12.3%

14.6%

15%

14.3%

Net

4.4%

3.8%

1.1%

8.7%

8.9%

7.8%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
To find the value within Symantec shares, I looked beyond GAAP earnings to examine its free cash flow, which is copious. But just as I began warming to the stock, the good folks at Motley Fool Inside Value -- who recommended Symantec to our subscribers just a little over one year ago -- appear to be losing their patience.

Reviewing the acquisition of IT infrastructure monitor Altiris in our February update, the Inside Value team approved of the firm for making a buy that "dovetails with Symantec's core anti-virus offering and its Veritas products and seems to meet with the company's aim to serve as a strategic IT vendor." But they also criticized Symantec for spending time on outside acquisitions, while the threat from Microsoft's move into the security space continues to loom large. If sales growth at Symantec comes in as low as analysts are predicting, which would suggest that Microsoft is making further incursions into Symantec's market share, I just may have to temper my optimism and agree with my colleagues.

Symantec is one of approximately 30 Inside Value recommendations currently lagging the overall market since recommendation. But never fear -- even this slight underperformance has made moeny for our members. Moreover, thanks to the margin of safety assured by our value investing philosophy, our losers usually don't have far to fall, and our winners can have plenty of room to rise. Result: The total Inside Value portfolio is beating the market by nearly seven percentage points as of this writing. Check it out today.

Fool contributor Rich Smith does not own shares of any company named above.