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Check Point (CHKP) to Post Q2 Earnings: What's in Store?

Zacks Equity Research

Check Point Software Technologies CHKP is scheduled to report second-quarter 2019 results on Jul 24.

Notably, the company outperformed the Zacks Consensus Estimate in each of the trailing four quarters, the average positive surprise being 2.47%.

In the last reported quarter, Check Point’s earnings increased 2% year over year to $1.32 per share, topping the Zacks Consensus Estimate by a penny.

The company’s revenues jumped 4% to $472 million and beat the consensus estimate of $471 million.

Outlook and Estimates for Q2

The company expects second-quarter revenues to be between $474 million and $500 million. Non-GAAP earnings are projected in the range of $1.32 to $1.40 per share.

For the quarter, the Zacks Consensus Estimate for earnings is pegged at $1.37, stable with the year-ago reported number. The same for revenues stands at $487.56 million, indicating a 4.23% rise.

Check Point Software Technologies Ltd. Price and EPS Surprise

Check Point Software Technologies Ltd. Price and EPS Surprise

Check Point Software Technologies Ltd. price-eps-surprise | Check Point Software Technologies Ltd. Quote

 

Let's see how things are shaping up for this upcoming announcement.

Factors at Play

Check Point’s second-quarter results are likely to benefit from increasing security subscription backed by strong demand for its cloud, mobile and zero-day advanced threat prevention technologies.

Moreover, the company completed the ForceNock acquisition in the last reported quarter, which is a positive. The addition of machine learning to Check Point’s offerings is likely to have strengthened the demand for its portfolio among customers.

The company is winning new customer accounts, which is driving revenues. In the first quarter, the number of customers who signed deals worth $1 million or more was 47, up year over year from 44 customers. This uptrend is likely to have continued in the second quarter, given the bright prospects of the cybersecurity market.

A solid product portfolio is aiding the company’s growth. Notably, the Check Point Maestro Hyperscale and the 6000 Series Getaways had already attracted a few deals immediately after its launch in the first quarter. This is expected to have added significant customers in the to-be- reported quarter as well.

However, increased investments in sales and marketing efforts by the company will hurt margins.

Moreover, severe competition from the likes of Palo Alto PANW, Cisco CSCO, Fortinet FTNT is expected to weigh on the company’s results.

Check Point currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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