A month has gone by since the last earnings report for Check Point Software (
CHKP Quick Quote CHKP - Free Report) . Shares have added about 2.2% in that time frame, outperforming 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 Q1 Earnings Beat Estimates, Sales Miss
Check Point Software Technologies reported mixed first-quarter 2023 results, wherein the bottom line surpassed the Zacks Consensus Estimate but the top line missed the same. However, both figures improved year over year.
The IT security solutions provider reported non-GAAP earnings of $1.80 per share, beating the Zacks Consensus Estimate of $1.74. The bottom line increased 15% from the year-ago quarter’s earnings of $1.57 per share.
Check Point’s quarterly revenues climbed 4% year over year to $566 million, which missed the Zacks Consensus Estimate of $569 million. The upside was driven by double-digit growth in product and subscription revenues.
Security subscription revenues were $228.2 million, increasing 13% year over year on double-digit revenue growth in Quantum, CloudGuard and Harmony solutions.
Products and licenses revenues decreased 6.8% year over year to $108 million. Products, which are currently in the process of transitioning to cloud solutions, have been included in the subscription line.
Total revenues from product and security subscriptions were $336.2 million, up 5.9% year over year.
Software updates and maintenance revenues increased to $230 million from $225.2 million reported in the year-ago quarter.
As of Mar 31, 2023, deferred revenues were $2 billion, up 8% year over year.
Non-GAAP operating income for the first quarter of 2023 totaled $238 million, down from $239 million in the year-ago quarter. Non-GAAP operating margin contracted 200 basis points to 42%.
Balance Sheet & Other Details
Check Point exited the first quarter with cash and cash equivalents, marketable securities and short-term deposits of $3.62 billion compared with the previous quarter’s $3.50 billion.
The company generated cash worth $386 million from operational activities during the first quarter of 2023.
It repurchased 2.6 million shares for about $325 million during the reported quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
At this time, Check Point has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Check Point has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Check Point is part of the Zacks Computers - IT Services industry. Over the past month, ServiceNow (
NOW Quick Quote NOW - Free Report) , a stock from the same industry, has gained 23.8%. The company reported its results for the quarter ended March 2023 more than a month ago.
ServiceNow reported revenues of $2.1 billion in the last reported quarter, representing a year-over-year change of +21.7%. EPS of $2.37 for the same period compares with $1.73 a year ago.
For the current quarter, ServiceNow is expected to post earnings of $2.05 per share, indicating a change of +26.5% from the year-ago quarter. The Zacks Consensus Estimate has changed +2.4% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for ServiceNow. Also, the stock has a VGM Score of D.