Back to top

Image: Bigstock

What to Expect From Check Point (CHKP) This Earnings Season?

Read MoreHide Full Article

Check Point Software Technologies Ltd. (CHKP - Free Report) is scheduled to report first-quarter 2018 results on Apr 25. The question lingering on investors’ minds is whether this provider of information technology (IT) security solutions can deliver a positive surprise.

Last quarter, the company delivered a positive earnings surprise of 4.6%. Notably, Check Point Software has outperformed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average positive surprise of 3.6%.

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

Factors Likely to Drive Results

Check Point continues to gain from strong demand for its cyber security solutions. Rapid adoption of Check Point’s data-center appliances and continued enhancement in data-center product lines are anticipated to provide adequate support to revenue growth.

Notably, during the soon-to-be-reported quarter, the company unveiled three new types of “Smart-1 security management appliances” meant for Gen V (5th generation) cyber protection. Check Point also announced the “CloudGuard product family” targeting Gen V cyber threats.

Additionally, the company collaborated with Orange Cyberdefense. Per the agreement, Check Point Sandblast Mobile technology will be used for the development of Orange Mobile Threat Protection.

However, ongoing issues related to the changes it made in its U.S. sales force makes us skeptical about the company’s near-term performance. Per management, its fourth-quarter revenues were hurt by significant changes made in U.S. sales force that has not yet reached full potential. This might continue to affect financials for some time now.

What the Zacks Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Check Point has a Zacks Rank #3 and an Earnings ESP of -0.69%. This indicates that the company is unlikely to beat estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The Zacks Consensus Estimate for the first quarter is pegged at $1.28 per share, indicating an increase of 6.7% from the year-ago quarter. Revenues are estimated to be around $452.74 million, indicating 4% increase on a year-over-year basis.

Stocks to Consider

Here are some stocks, which you may consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

Paycom Software, Inc. (PAYC - Free Report) with an Earnings ESP of +0.33%, and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Western Digital Corporation (WDC - Free Report) with an Earnings ESP of +2.30% and a Zacks Rank #1.

CACI International, Inc. (CACI - Free Report) with an Earnings ESP of +8.18% and a Zacks Rank #2.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>

Published in