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Why Is Check Point (CHKP) Down 12.7% Since Last Earnings Report?
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A month has gone by since the last earnings report for Check Point Software (CHKP - Free Report) . Shares have lost about 12.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Check Point due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Check Point Q4 Earnings Top, Revenues Meet Estimates
Check Point reported fourth-quarter 2019 results, wherein the bottom line beat and the top line came in line with the Zacks Consensus Estimate.
The company’s non-GAAP earnings per share of $2.02 beat the consensus mark by 1.5%. The figure came within the company’s guidance of $1.93-$2.04 and climbed 21% year over year, driven mainly by higher revenues and lower share count.
Revenues were $544 million, up 3% year over year. The figure came within the company’s guidance of $527-$557 million.
Growth in security subscriptions revenues, including CloudGuard suite of products and Infinity deals, boosted the top line.
Quarter Details
Security subscription revenues came in at $163.7 million, increasing 11.6% year over year, aided by strong demand for its next-generation threat extraction and protection, CloudGuard and Infinity solutions. However, revenues of $157.9 million from Products and licenses fell 1.7%.
Total revenues from product and security subscriptions totaled $321.6 million, growing 4.7% year over year.
Software updates and maintenance revenues increased to $222.2 million, up 1.8%.
As of Dec 31, 2019, deferred revenues were $1.01 billion, up 3.23% year over year, reflecting strength in security subscription and support.
Region wise, the Americas generated 4% of total revenues, Europe, Middle East and Africa accounted for 4%, and the Asia Pacific accounted for 1%.
The company continued to witness strong traction of its high-end 16000 and 26000 security appliances, which are optimized for Gen 5 security operations. It also launched the Maestro Orchestrator, which delivers cloud-like elasticity and reliability to data centers.
Check Point also significantly increased its marketing activities in the region during the quarter.
Operating Results
Non-GAAP operating income for the reported quarter came in at $280 million, increasing 0.4% year over year. Non-GAAP operating margin contracted 200 basis points to 51%, as a result of weakened currencies, including the Israeli Shekel, creating a headwind of $4 million.
Balance Sheet & Other Financial Details
Check Point exited the fourth quarter with cash and cash equivalents, marketable securities and short-term deposits of $1.58 billion compared with the previous quarter’s $1.68 billion.
The company generated cash worth $246.4 million from operational activities, up from the third quarter’s $244 million.
It repurchased approximately 2.9 million shares for about $325 million in the fourth quarter.
Full-Year 2019 Highlights
Revenues for the full year came in at $2 billion, up 4% year over year.
Non-GAAP earnings of $6.13 climbed 7% year over year.
Outlook
The company intends to continue shifting its revenues from products to subscriptions and Infinity.
Furthermore, for the first quarter of 2020, revenues are expected to be between $475 million and $495 million, and non-GAAP earnings in the $1.37-$1.43 range.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, Check Point has an average Growth Score of C, a grade with the same score on the momentum front. 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 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 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.
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Why Is Check Point (CHKP) Down 12.7% Since Last Earnings Report?
A month has gone by since the last earnings report for Check Point Software (CHKP - Free Report) . Shares have lost about 12.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Check Point due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Check Point Q4 Earnings Top, Revenues Meet Estimates
Check Point reported fourth-quarter 2019 results, wherein the bottom line beat and the top line came in line with the Zacks Consensus Estimate.
The company’s non-GAAP earnings per share of $2.02 beat the consensus mark by 1.5%. The figure came within the company’s guidance of $1.93-$2.04 and climbed 21% year over year, driven mainly by higher revenues and lower share count.
Revenues were $544 million, up 3% year over year. The figure came within the company’s guidance of $527-$557 million.
Growth in security subscriptions revenues, including CloudGuard suite of products and Infinity deals, boosted the top line.
Quarter Details
Security subscription revenues came in at $163.7 million, increasing 11.6% year over year, aided by strong demand for its next-generation threat extraction and protection, CloudGuard and Infinity solutions. However, revenues of $157.9 million from Products and licenses fell 1.7%.
Total revenues from product and security subscriptions totaled $321.6 million, growing 4.7% year over year.
Software updates and maintenance revenues increased to $222.2 million, up 1.8%.
As of Dec 31, 2019, deferred revenues were $1.01 billion, up 3.23% year over year, reflecting strength in security subscription and support.
Region wise, the Americas generated 4% of total revenues, Europe, Middle East and Africa accounted for 4%, and the Asia Pacific accounted for 1%.
The company continued to witness strong traction of its high-end 16000 and 26000 security appliances, which are optimized for Gen 5 security operations. It also launched the Maestro Orchestrator, which delivers cloud-like elasticity and reliability to data centers.
Check Point also significantly increased its marketing activities in the region during the quarter.
Operating Results
Non-GAAP operating income for the reported quarter came in at $280 million, increasing 0.4% year over year. Non-GAAP operating margin contracted 200 basis points to 51%, as a result of weakened currencies, including the Israeli Shekel, creating a headwind of $4 million.
Balance Sheet & Other Financial Details
Check Point exited the fourth quarter with cash and cash equivalents, marketable securities and short-term deposits of $1.58 billion compared with the previous quarter’s $1.68 billion.
The company generated cash worth $246.4 million from operational activities, up from the third quarter’s $244 million.
It repurchased approximately 2.9 million shares for about $325 million in the fourth quarter.
Full-Year 2019 Highlights
Revenues for the full year came in at $2 billion, up 4% year over year.
Non-GAAP earnings of $6.13 climbed 7% year over year.
Outlook
The company intends to continue shifting its revenues from products to subscriptions and Infinity.
Furthermore, for the first quarter of 2020, revenues are expected to be between $475 million and $495 million, and non-GAAP earnings in the $1.37-$1.43 range.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, Check Point has an average Growth Score of C, a grade with the same score on the momentum front. 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 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 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.