The rising complexity of cyber risks and the need to safeguard sensitive data are driving organizations to invest in strong cloud security solutions, making it a crucial part of today's digital infrastructure.
Given this backdrop, it could be wise to consider investing in fundamentally strong cybersecurity stocks, such as Tenable Holdings, Inc. (TENB), OneSpan Inc. (OSPN), and Radware Ltd. (RDWR).
As cybercrimes have dramatically escalated, businesses have focused their expenditure on information security solutions to bolster their internal security infrastructures. The use of targeted assaults, which penetrate targets' network infrastructure while remaining anonymous, has increased recently.
Therefore, the U.S. cybersecurity market is expected to grow at a CAGR of 8.1% by 2030. Also, the growing use of cloud services has resulted in a notable surge in the need for cloud security software. Businesses need strong security measures to safeguard their data and applications in the cloud, ensure compliance with regulations, and uphold customer trust.
Given these favorable industry trends, let’s look at the fundamentals of three Software - Security stocks, starting with #3.
Stock #3: Tenable Holdings, Inc. (TENB)
TENB provides cyber exposure solutions in the Americas, Europe, the Middle East, Africa, the Asia Pacific, and Japan. The company also offers Nessus, a vulnerability assessment solution for the cybersecurity industry and enterprise platform, and Nessus Expert, which enables users to programmatically detect cloud infrastructure misconfigurations and vulnerabilities in the design and build phase.
On February 7, 2025, TENB announced it had closed its acquisition of Vulcan Cyber Ltd., a leading innovator in exposure management. Vulcan Cyber’s capabilities would enhance TENB’s industry-leading Exposure Management platform, delivering comprehensive visibility, prioritization, and remediation across the entire attack surface.
In terms of the trailing-12-month gross profit margin, TENB’s 77.82% is 53.9% higher than the 50.57% industry average. Likewise, its 22.2% trailing-12-month levered FCF margin is 86% higher than the 11.96% industry average.
During the fourth quarter ended December 31, 2024, TENB’s revenue increased by 6.8% year-over-year to $235.73 million. The company’s net income was $1.87 billion, as compared to a net loss of $1.87 million in the previous year's quarter. Its non-GAAP EPS increased 64% year-over-year to $0.41.
The consensus revenue estimate of $233.91 million for the fiscal first quarter (ending March 2025) represents a 10.5% increase year-over-year. The company expects its EPS to increase 15.7% year-over-year to $0.29. The company has an impressive earnings surprise history; it surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.
Over the past month, the stock has surged 1.4%, closing the last trading session at $39.59.
TENB’s POWR Ratings reflect its promising outlook. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
TENB has an A grade for Growth and a B for Quality. It is ranked #3 out of 20 stocks in the B-rated Software - Security industry. Click here to see the additional ratings for TENB (Value, Momentum, Stability, and Sentiment).
Stock #2: OneSpan Inc. (OSPN)
OSPN designs, develops, and markets digital solutions for identity, authentication, and secure digital agreements worldwide. The company sells its solutions through its direct sales force, as well as through distributors, resellers, systems integrators, and original equipment manufacturers.
In terms of the trailing-12-month gross profit margin, OSPN’s 71.14% is 40.7% higher than the 50.6% industry average. Its 0.86x trailing-12-month asset turnover ratio is 44.1% higher than the 0.59x industry average.
OSPN reported a total revenue of $56.24 million during the third quarter that ended September 30, 2024. Its gross profit grew 2.2% from the year-ago value to $41.55 million.
In addition, the company’s adjusted EBITDA came in at $16.73 million, up 165.3% from the prior year’s period. OSPN’s non-GAAP net income of $13.10 million or $0.33 per share indicates growth of 266.1% and 266.7% over the previous year’s quarter, respectively.
Street expects OSPN’s revenue for the fiscal year (ended December 2024) to increase 2.2% year-over-year to $240.37 million. Moreover, it beat the revenue and EPS estimates in each of the trailing four quarters, which is promising.
Shares of OSPN have gained 98.2% over the past year to close the last trading session at $19.80.
OSPN’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
OSPN has a B grade for Growth, Value, Sentiment, and Quality. It is ranked #2 in the same industry.
In addition to the POWR Ratings we’ve stated above, we also have OSPN ratings for Momentum and Stability. Get all OSPN ratings here.
Stock #1: Radware Ltd. (RDWR)
RDWR develops, manufactures, and markets cyber security and application delivery solutions for cloud, on-premises, and software-defined data centers worldwide. The company operates in two segments: Radware's Core Business and The Hawks' Business.
In terms of the trailing-12-month levered FCF margin, RDWR’s 16.09% is 34.6% higher than the 11.96% industry average. Its 80.63% trailing-12-month gross profit margin is 59.4% higher than the 50.57% industry average.
For the fourth quarter that ended on December 31, 2024, RDWR’s revenues rose 4.9% year-over-year to $59.04 million. The company’s net income was $2.45 million compared to a net loss of $5.85 million in the previous year's quarter. Its net income per share came in at $0.06 compared to a net loss per share of $0.14 in the previous year's quarter.
The consensus revenue estimate of $70.76 million for the fiscal first quarter (ending March 2025) represents an 8.7% increase year-over-year. The consensus EPS estimate of $0.23 for the same quarter indicates a 41.7% improvement year-over-year. The company has an impressive earnings surprise history; it surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.
Over the past six months, the stock has surged 11.5%, closing the last trading session at $23.81.
RDWR’s POWR Ratings reflect its bright outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
RDWR has an A grade for Growth and Quality. It is ranked first in the same industry. Click here to see the additional ratings for RDWR.
What To Do Next?
Get your hands on this special report with 3 low priced companies with tremendous upside potential even in today’s volatile markets:
3 Stocks to DOUBLE This Year >
TENB shares were trading at $39.92 per share on Wednesday afternoon, up $0.33 (+0.83%). Year-to-date, TENB has gained 1.37%, versus a 4.55% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
3 Cybersecurity Firms Safeguarding the Digital Realm StockNews.com
