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Check Point's (CHKP) Q2 Earnings: What's in the Offing?

Check Point Software Technologies Ltd.CHKP is scheduled to report second-quarter 2018 results on Jul 25.

Notably, the company has outperformed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average positive surprise of 3.6%.

In the last reported quarter, Check Point's earnings per share increased 8.3% year over year to $1.30, topping the Zacks Consensus Estimate of $1.28. The company's revenues increased 4% but narrowly missed the Zacks Consensus Estimate of $453 million.

For the second quarter, the Zacks Consensus Estimates for earnings is pegged at $1.31 per share, indicating 3.97% increase on a year-over-year basis, and for revenues, at $490.92 million, indicating 0.51% increase from the prior-year quarter.

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

Factors Likely to Drive Results

Check Point Software's rapid adoption of information technology security solutions is boosting its top and bottom-line growth.

The company's shift towards subscription-based business model is a tailwind.. In the last reported quarter, revenues from its Software Blades subscription increased about 14% year over year. Rapid growth rate of this segment is expected to contribute significantly to the company's revenue increase.

Moreover, Check Point continues to benefit from strong demand for cybersecurity solutions. With increasing and more sophisticated cyber security breaches, the market for security solutions is expanding. Checkpoint continues to earn positive remarks for its threat detection capabilities, positioning it among the leaders in the security market.

However, we note that the company's efficient expense management method of not growing at the cost of margins and earnings might continue to keep it profitable in spite of obstructing the top-line growth.

Moreover, the ongoing issues related to the changes made in its U.S. sales force make us doubtful about the company's near-term performance.

The company on its latest earnings conference call stated that new employees are taking much longer than expected to reach their full potential. As a consequence of this, the company's top-line remains under pressure.

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 #2 but its Earnings ESP is -0.15%. 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 .

Check Point Software Technologies Ltd. Price and EPS Surprise

Check Point Software Technologies Ltd. Price and EPS Surprise | Check Point Software Technologies Ltd. Quote

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:

Castlight Health, Inc. CSLT with an Earnings ESP of +11.11%, and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

CyberArk Software Ltd. CYBR with an Earnings ESP of +3.38% and a Zacks Rank #1.

NetApp, Inc. NTAP with an Earnings ESP of +1.12% and a Zacks Rank #1.

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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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