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Why Is Check Point (CHKP) Up 5.1% 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 added about 5.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Check Point due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Check Point Q2 Earnings & Revenues Beat Expectations
Check Point Software Technologies reported second-quarter 2024 results, wherein both the bottom and top lines surpassed the Zacks Consensus Estimate and improved year over year.
The IT security solutions provider reported non-GAAP earnings of $2.17 per share, beating the Zacks Consensus Estimate of $2.16. The bottom line increased 8% from the year-ago quarter’s earnings of $2 per share.
Check Point’s quarterly revenues increased 7% year over year to $627.4 million and surpassed the Zacks Consensus Estimate of $624 million. The upside was driven by double-digit growth in security subscription revenues.
Quarterly Details
Security subscription revenues were $272 million, which increased 14% year over year, driven by the adoption of cloud solutions and strong demand for the Harmony product family. Our model estimate for security subscription revenues was pegged at $273.4 million, up 14.3%.
Products and licenses revenues increased 1.03% year over year to $118.1 million. Our model estimate for products and licenses revenues was pegged at $112.96 million, which decreased 3.4% year over year. Products that are currently in the process of transitioning to cloud solutions have been included in the subscription line.
Total revenues from product and security subscriptions were $389.8 million, up 9.6% year over year.
Software updates and maintenance revenues increased to $237.6 million from $232.9 million reported in the year-ago quarter. Our model estimate for software updates and maintenance revenues was pegged at $236.88 million.
As of Jun 30, 2024, deferred revenues were $1.82 billion, up 2% year over year.
Non-GAAP operating income for the second quarter of 2024 totaled $265 million, up from $263 million reported in the year-ago quarter. Non-GAAP operating margin was 42%, which decreased from 44.5% reported in the year-ago quarter.
Balance Sheet & Other Details
Check Point exited the second quarter with cash and cash equivalents, marketable securities and short-term deposits of $3.1 billion compared with the previous quarter’s $3 billion.
The company generated cash worth $200 million from operational activities during the second quarter of 2024.
It repurchased approximately 2.1 million shares for about $325 million during the reported quarter.
Guidance
For the third quarter of fiscal 2024, CHKP expects revenues between $615 million and $650 million. Non-GAAP earnings are anticipated in the range of $2.19-$2.29 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Check Point has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. 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) Up 5.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Check Point Software (CHKP - Free Report) . Shares have added about 5.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Check Point due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Check Point Q2 Earnings & Revenues Beat Expectations
Check Point Software Technologies reported second-quarter 2024 results, wherein both the bottom and top lines surpassed the Zacks Consensus Estimate and improved year over year.
The IT security solutions provider reported non-GAAP earnings of $2.17 per share, beating the Zacks Consensus Estimate of $2.16. The bottom line increased 8% from the year-ago quarter’s earnings of $2 per share.
Check Point’s quarterly revenues increased 7% year over year to $627.4 million and surpassed the Zacks Consensus Estimate of $624 million. The upside was driven by double-digit growth in security subscription revenues.
Quarterly Details
Security subscription revenues were $272 million, which increased 14% year over year, driven by the adoption of cloud solutions and strong demand for the Harmony product family. Our model estimate for security subscription revenues was pegged at $273.4 million, up 14.3%.
Products and licenses revenues increased 1.03% year over year to $118.1 million. Our model estimate for products and licenses revenues was pegged at $112.96 million, which decreased 3.4% year over year. Products that are currently in the process of transitioning to cloud solutions have been included in the subscription line.
Total revenues from product and security subscriptions were $389.8 million, up 9.6% year over year.
Software updates and maintenance revenues increased to $237.6 million from $232.9 million reported in the year-ago quarter. Our model estimate for software updates and maintenance revenues was pegged at $236.88 million.
As of Jun 30, 2024, deferred revenues were $1.82 billion, up 2% year over year.
Non-GAAP operating income for the second quarter of 2024 totaled $265 million, up from $263 million reported in the year-ago quarter. Non-GAAP operating margin was 42%, which decreased from 44.5% reported in the year-ago quarter.
Balance Sheet & Other Details
Check Point exited the second quarter with cash and cash equivalents, marketable securities and short-term deposits of $3.1 billion compared with the previous quarter’s $3 billion.
The company generated cash worth $200 million from operational activities during the second quarter of 2024.
It repurchased approximately 2.1 million shares for about $325 million during the reported quarter.
Guidance
For the third quarter of fiscal 2024, CHKP expects revenues between $615 million and $650 million. Non-GAAP earnings are anticipated in the range of $2.19-$2.29 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Check Point has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Check Point has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.