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Why Is Check Point (CHKP) Down 1.1% Since Last Earnings Report?
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It has been about a month since the last earnings report for Check Point Software (CHKP - Free Report) . Shares have lost about 1.1% 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 catalysts.
Recent Earnings
Check Point Software reported solid results for second-quarter fiscal 2018, wherein its top line and bottom line beat the Zacks Consensus Estimate.
The company’s non-GAAP earnings per share (EPS) of $1.37 beat the Zacks Consensus Estimate of $1.31. Also, the bottom line climbed 8% year over year, driven mainly by higher security subscriptions, reduced cost of revenues and a lower share count, partially offset by higher operating expenses.
Fiscal second-quarter revenues came in at $468 million, up approximately 2% year over year. The revenue figure came within the company’s guidance of $445-$475 million and beat the Zacks Consensus Estimate of $461 million.
Quarter Details
Security subscription revenues continued to be strong at $132.1 million, increasing 12% year over year. However, revenues of $125.7 million from Products lagged the year-ago quarter by 9.1%. Software updates and maintenance revenues increased to $210 million, representing 3.8% growth.
Geographically, the Americas generated 48% of the total revenues, Europe accounted for 36% of total revenues, while the Asia Pacific, Japan and the Middle East and Africa accounted for the remaining 16%.
Notably, performance of the U.S sales force, which had negatively impacted the revenues of the previous quarter, showed improvement in the fiscal second quarter and results were on par with the company’s expectation.
Talking about deal size, the number of new customers — who signed deals worth $1 million or more — totaled 58. Customers, who signed deals worth $50,000 and more, contributed 76% to the total order value.
Operating Results
Non-GAAP operating income came in at $247.1 million, falling 0.4% year over year. Non-GAAP operating margin contracted 130 basis points (bps) to 52.8%. This can be attributed to increased investments in sales and marketing efforts by the company.
Non-GAAP net income was $218.2 million or $1.37 per share, up from $212 million or $1.26 reported in the year-earlier quarter.
Balance Sheet & Other Financial Details
Check Point exited the second quarter with cash balances of $4.042 billion, compared with $4.009 billion in the previous quarter.
During the reported quarter, the company generated cash worth $213 million from operational activities, compared with $419 million in the last quarter.
The company repurchased approximately 2.5 million shares for $250 million. Check Point also announced doubling its share repurchase plan to $2 billion and increasing the quarterly repurchase by 30%, subject to quarterly variations.
Outlook
The company has provided guidance for the third quarter of fiscal 2018. Revenues are expected to be between $454 million to $474 million. Non-GAAP EPS is projected in the range of $1.30 to $1.40.
Check Point reiterated its guidance for the full year fiscal 2018, wherein revenues are anticipated to be in the range of $1.85-$1.93 billion.
Non-GAAP earnings are projected in the band of $5.45-$5.75 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, Check Point has a subpar Growth Score of D, however its momentum is doing a lot better with a B. Charting a somewhat similar path, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for momentum investors than value investors.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, 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 1.1% Since Last Earnings Report?
It has been about a month since the last earnings report for Check Point Software (CHKP - Free Report) . Shares have lost about 1.1% 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 catalysts.
Recent Earnings
Check Point Software reported solid results for second-quarter fiscal 2018, wherein its top line and bottom line beat the Zacks Consensus Estimate.
The company’s non-GAAP earnings per share (EPS) of $1.37 beat the Zacks Consensus Estimate of $1.31. Also, the bottom line climbed 8% year over year, driven mainly by higher security subscriptions, reduced cost of revenues and a lower share count, partially offset by higher operating expenses.
Fiscal second-quarter revenues came in at $468 million, up approximately 2% year over year. The revenue figure came within the company’s guidance of $445-$475 million and beat the Zacks Consensus Estimate of $461 million.
Quarter Details
Security subscription revenues continued to be strong at $132.1 million, increasing 12% year over year. However, revenues of $125.7 million from Products lagged the year-ago quarter by 9.1%.
Software updates and maintenance revenues increased to $210 million, representing 3.8% growth.
Geographically, the Americas generated 48% of the total revenues, Europe accounted for 36% of total revenues, while the Asia Pacific, Japan and the Middle East and Africa accounted for the remaining 16%.
Notably, performance of the U.S sales force, which had negatively impacted the revenues of the previous quarter, showed improvement in the fiscal second quarter and results were on par with the company’s expectation.
Talking about deal size, the number of new customers — who signed deals worth $1 million or more — totaled 58. Customers, who signed deals worth $50,000 and more, contributed 76% to the total order value.
Operating Results
Non-GAAP operating income came in at $247.1 million, falling 0.4% year over year. Non-GAAP operating margin contracted 130 basis points (bps) to 52.8%. This can be attributed to increased investments in sales and marketing efforts by the company.
Non-GAAP net income was $218.2 million or $1.37 per share, up from $212 million or $1.26 reported in the year-earlier quarter.
Balance Sheet & Other Financial Details
Check Point exited the second quarter with cash balances of $4.042 billion, compared with $4.009 billion in the previous quarter.
During the reported quarter, the company generated cash worth $213 million from operational activities, compared with $419 million in the last quarter.
The company repurchased approximately 2.5 million shares for $250 million. Check Point also announced doubling its share repurchase plan to $2 billion and increasing the quarterly repurchase by 30%, subject to quarterly variations.
Outlook
The company has provided guidance for the third quarter of fiscal 2018. Revenues are expected to be between $454 million to $474 million. Non-GAAP EPS is projected in the range of $1.30 to $1.40.
Check Point reiterated its guidance for the full year fiscal 2018, wherein revenues are anticipated to be in the range of $1.85-$1.93 billion.
Non-GAAP earnings are projected in the band of $5.45-$5.75 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, Check Point has a subpar Growth Score of D, however its momentum is doing a lot better with a B. Charting a somewhat similar path, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for momentum investors than value investors.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Check Point has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.