Will Check Point (CHKP) Surprise Q1 Earnings Estimates? - Analyst Blog
Check Point Software Technologies Ltd. CHKP is set to report first-quarter 2015 results on Apr 20. Last quarter, the company posted in-line earnings. It is worth noting that in last four quarters, Check Point has outperformed the Zacks Consensus Estimate twice while matched the same in the other two posting with an average positive earnings surprise of 0.6%. Let us see how things are shaping up for this announcement.
Factors to Consider
Check Point has been witnessing higher adoption of its Application Control, Anti-Bot and URL Filtering blades which, coupled with higher demand for its data center and high-end appliances, should have a positive impact on the to-be-reported quarter results. Another factor that is likely to contribute to the overall growth is the increasing number of large deals.
Furthermore, we remain encouraged by Check Point’s sustained focus on expanding its product portfolio through acquisitions and offering industry-leading solutions which will drive growth. Also, we expect that the increasing IT security expenditure will benefit Check Point’s results, going forward. Per research firm Gartner, worldwide spending on IT security in 2014 was about $70 billion and is expected to reach $76.9 billion in 2015.
Also, the rapid adoption of Check Point’s data center appliances and the continuous enhancement in data center product lines are expected to provide adequate support to revenue growth.
However, an uncertain economic environment, competitive pressures, currency headwinds and competition from Juniper Networks, Cisco Systems and Fortinet remain the concerns.
Earnings Whispers
Our proven model does not conclusively show that Check Point will beat earnings estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 84 cents. Hence, the difference is 0.00%.
Zacks Rank: Check Point’s Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Here are some other companies, which you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Broadcom Corp. BRCM, with an Earnings ESP of +5.00% and a Zacks Rank #1 (Strong Buy).
Apple Inc. AAPL, with an Earnings ESP of +6.05% and a Zacks Rank #2 (Buy).
Amazon.com Inc. AMZN, with an Earnings ESP of +150.00% and a Zacks Rank #3.
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