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Check Point (CHKP) Up 2.9% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Check Point Software (CHKP - Free Report) . Shares have added about 2.9% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Check Point due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Check Point reported second-quarter 2020 results, wherein both top and bottom lines beat the Zacks Consensus Estimate.
The company’s non-GAAP earnings per share of $1.58 beat the consensus mark by 11.27%. The figure also climbed 15% year over year.
Revenues were $506 million, up 4% year over year. Moreover, the figure exceeded the Zacks Consensus Estimate of $486 million.
Double-digit growth in SaaS and IaaS cloud solutions drove revenues. Moreover, work-from-home-related solutions — Mobile Access and Sandblast Agent — continued to witness strong traction with more than 300% and 19% growth, respectively.
Quarter Details
Subscription revenues came in at $164 million, increasing 10% year over year, aided by strong demand for its advanced solutions, primarily CloudGuard, Sandblast Zero-day threat prevention and Infinity solutions. During the quarter, the company secured several Infinity deals in various industries, including government, telecommunication and industrial.
Revenues of $122.6 million from products and licenses grew 1%. Products are currently in the process of transitioning to cloud solutions, which is included in the subscription line.
Total revenues from product and security subscriptions were $287 million, growing 6% year over year.
Software update and maintenance revenues increased 1% to $219 million.
As of Jun 30, deferred revenues were $1.34 billion, up 4% year over year, reflecting strength in security subscription.
Region-wise, the Americas generated 46% of total revenues; Europe, Middle East and Africa accounted for 42%; and the Asia Pacific contributed 12%. EMEA and APAC recorded maximum growth.
The second quarter witnessed strong execution in EMEA and APAC, driven mainly by strength in financial services, technology and healthcare verticals.
Non-GAAP operating income for the reported quarter came in at $253 million, increasing 4.5% year over year. Non-GAAP operating margin remained flat at 50%.
Balance Sheet & Other Financial Details
Check Point exited the second quarter with cash and cash equivalents, marketable securities and short-term deposits of $3.96 billion compared with the previous quarter’s $3.99 billion.
The company generated cash worth $252 million from operational activities, down from the previous quarter’s $359 million.
It repurchased approximately 3.1 million shares for about $325 million in the second quarter.
Outlook
Check Point is still assessing the potential impacts of the pandemic-led disruptions on its business, and thus refrained from providing any formal guidance for the third quarter of 2020.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, Check Point has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Check Point has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Check Point (CHKP) Up 2.9% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Check Point Software (CHKP - Free Report) . Shares have added about 2.9% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Check Point due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Check Point's Q2 Earnings & Revenues Surpass Estimates
Check Point reported second-quarter 2020 results, wherein both top and bottom lines beat the Zacks Consensus Estimate.
The company’s non-GAAP earnings per share of $1.58 beat the consensus mark by 11.27%. The figure also climbed 15% year over year.
Revenues were $506 million, up 4% year over year. Moreover, the figure exceeded the Zacks Consensus Estimate of $486 million.
Double-digit growth in SaaS and IaaS cloud solutions drove revenues. Moreover, work-from-home-related solutions — Mobile Access and Sandblast Agent — continued to witness strong traction with more than 300% and 19% growth, respectively.
Quarter Details
Subscription revenues came in at $164 million, increasing 10% year over year, aided by strong demand for its advanced solutions, primarily CloudGuard, Sandblast Zero-day threat prevention and Infinity solutions. During the quarter, the company secured several Infinity deals in various industries, including government, telecommunication and industrial.
Revenues of $122.6 million from products and licenses grew 1%. Products are currently in the process of transitioning to cloud solutions, which is included in the subscription line.
Total revenues from product and security subscriptions were $287 million, growing 6% year over year.
Software update and maintenance revenues increased 1% to $219 million.
As of Jun 30, deferred revenues were $1.34 billion, up 4% year over year, reflecting strength in security subscription.
Region-wise, the Americas generated 46% of total revenues; Europe, Middle East and Africa accounted for 42%; and the Asia Pacific contributed 12%. EMEA and APAC recorded maximum growth.
The second quarter witnessed strong execution in EMEA and APAC, driven mainly by strength in financial services, technology and healthcare verticals.
Non-GAAP operating income for the reported quarter came in at $253 million, increasing 4.5% year over year. Non-GAAP operating margin remained flat at 50%.
Balance Sheet & Other Financial Details
Check Point exited the second quarter with cash and cash equivalents, marketable securities and short-term deposits of $3.96 billion compared with the previous quarter’s $3.99 billion.
The company generated cash worth $252 million from operational activities, down from the previous quarter’s $359 million.
It repurchased approximately 3.1 million shares for about $325 million in the second quarter.
Outlook
Check Point is still assessing the potential impacts of the pandemic-led disruptions on its business, and thus refrained from providing any formal guidance for the third quarter of 2020.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, Check Point has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Check Point has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.