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Check Point (CHKP) to Report Q3 Earnings: What's in Store?

Check Point Software Technologies Ltd.CHKP is set to report third-quarter 2015 results on Oct 26. Last quarter, the company posted a positive earnings surprise of 3.45%. Notably, Check Point has outperformed the Zacks Consensus Estimate in three out of the trailing four quarters with an average positive earnings surprise of 1.76%.

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

Factors to Consider

Check Point posted solid second-quarter results. Both the top line and the bottom line beat the respective Zacks Consensus Estimate and improved on a year-over-year basis.

Check Point has been witnessing higher adoption of its Application Control, Anti-Bot and URL Filtering blades which, coupled with increased demand for its data center and high-end appliances, should have a positive impact on the to-be-reported quarter results. Another factor that is likely to be a positive is the increasing number of large deals.

Also, the continuous enhancement in data center product lines should provide adequate support to revenue growth.

Moreover, Check Point's settlement with the Israeli tax authorities is a long-term positive. The company's continuous share buybacks bode well for investors.

However, an uncertain economic environment, competitive pressure, currency headwinds and competition from Juniper Networks JNPR , Cisco Systems and Fortinet remain the concerns.

Earnings Whispers

Our proven model does not conclusively show that Check Point will beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 88 cents. Hence, the difference is 0.00%.

Zacks Rank: Check Point's Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks to Consider

Here are some companies which you may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Facebook Inc. FB , with an Earnings ESP of +5.71% and a Zacks Rank #1.

Apple Inc. AAPL , with an Earnings ESP of +1.60% and a Zacks Rank #2.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

CHECK PT SOFTW (CHKP): Free Stock Analysis Report

APPLE INC (AAPL): Free Stock Analysis Report

JUNIPER NETWRKS (JNPR): Free Stock Analysis Report

FACEBOOK INC-A (FB): Free Stock Analysis Report

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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.


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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