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Check Point (CHKP) to Report Q3 Earnings: What to Expect?

Check Point Software CHKP is scheduled to report third-quarter 2020 results on Oct 22.

Over the trailing four quarters, the company’s earnings surpassed the Zacks Consensus Estimate on all occasions, the average beat being 4.6%.

In the last reported quarter, the company’s adjusted earnings of $1.58 per share beat the consensus mark and climbed 15% year over year as well. Revenues increased 4% year on year to $506 million, surpassing the Zacks Consensus Estimate of $486 million.

Check Point Software didn’t issue any third-quarter guidance during the second-quarter earnings call. During the call, the company stated that it is still assessing the likely impact of the pandemic-led disruptions on its business, and had, thus, refrained from providing any formal guidance for the third quarter.

Check Point Software Technologies Ltd. Price and Consensus

Check Point Software Technologies Ltd. Price and Consensus

Check Point Software Technologies Ltd. price-consensus-chart | Check Point Software Technologies Ltd. Quote

For the September-end quarter, the Zacks Consensus Estimate for revenues is pegged at $502.5 million, suggesting a 2.4% increase from the year-ago period. Moreover, the consensus mark for earnings is pinned at $1.53, calling for an increase of 6.3% year on year.

Let’s see how things have shaped up prior to this announcement.

Key Factors

Check Point’s quarterly performance is likely to benefit from the increasing security subscriptions on solid demand for its CloudGuard and Infinity products.

In addition, a huge global workforce is working remotely in an effort to contain the spread of the COVID-19 virus infection. However, more people logging into employers' networks means a greater need for security. This trend is anticipated to have fueled demand for Check Point’s products during the quarter under review.

Additionally, increased demand for network security gateways to support higher capacities amid the work-from-home wave is expected to have spurred demand for the company’s remote access VPN solutions.

Nevertheless, lack of components in the supply chain due to the pandemic-induced business disruptions, and labor and logistics issues might have thwarted Check Point’s third-quarter overall financial performance. Also, revenues from the Products segment are likely to have declined further during the period under discussion due to the company’s ongoing business transition to cloud solutions.

Further, the firm’s increased investments in sales and marketing (S&M) efforts might have clipped margins during the quarter to be reported. Notably, the company’s non-GAAP operating margin shrunk 160 basis points, year over year, to 48.1% in the first-half of 2020.

What Our Model Says

Our proven model does not predict an earnings beat for Check Point this season. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Check Point currently carries a Zacks Rank of 3 and has an Earnings ESP of -0.50%.

Stocks With Favorable Combinations

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat in their upcoming releases:

Vishay Intertechnology, Inc. VSH has an Earnings ESP of +6.45% and flaunts a Zacks Rank of 1, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Corning Incorporated GLW has an Earnings ESP of +0.59% and currently sports a Zacks Rank of 1.

Alphabet GOOGL has an Earnings ESP of +17.26% and carries a Zacks Rank of 2, currently.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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