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CHKP

Check Point Software Technologies NasdaqGS:CHKP Stock Report

Last Price

US$119.31

Market Cap

US$15.0b

7D

-4.2%

1Y

-4.1%

Updated

06 Aug, 2022

Data

Company Financials +
CHKP fundamental analysis
Snowflake Score
Valuation5/6
Future Growth2/6
Past Performance3/6
Financial Health6/6
Dividends0/6

CHKP Stock Overview

Check Point Software Technologies Ltd. develops, markets, and supports a range of products and services for IT security worldwide.

Rewards

Trading at 33.2% below our estimate of its fair value

Earnings are forecast to grow 4.65% per year

Risk Analysis

No risks detected for CHKP from our risk checks.

Check Point Software Technologies Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Check Point Software Technologies
Historical stock prices
Current Share PriceUS$119.31
52 Week HighUS$149.62
52 Week LowUS$107.85
Beta0.60
1 Month Change-4.54%
3 Month Change-0.73%
1 Year Change-4.14%
3 Year Change7.45%
5 Year Change12.62%
Change since IPO2,882.75%

Recent News & Updates

Aug 01

Check Point Software Technologies Non-GAAP EPS of $1.64 beats by $0.03, revenue of $571.1M beats by $10.7M

Check Point Software Technologies press release (NASDAQ:CHKP): Q2 Non-GAAP EPS of $1.64 beats by $0.03. Revenue of $571.1M (+8.6% Y/Y) beats by $10.7M. Product & License Revenues: $133 million, a 12 percent increase year over year Security Subscription Revenues: $210 million, a 14 percent increase year over year Deferred Revenues: $1,666 million, a 13 percent increase year over year GAAP Operating Income: $209 million, representing 37 percent of revenues Non-GAAP Operating Income: $249 million, representing 44 percent of revenues

Jul 25

Check Point Software: Stable And Reliable Cybersecurity Player

Check Point Software Technologies is a cybersecurity firm. The competition in the market for information and network security solutions is fierce, and I believe that, due to the attractiveness of the industry outlook, it will only get fiercer. I believe that Check Point Software owns some unique assets that make them a respected company and a serious competitor in the cybersecurity space. I think that the stock can be categorized as a low-risk stock due to its low beta, high free cash flow margin, large cash in the bank, zero debt, and long and reliable operating history. In my opinion, it's worth buying a 17 forward P/E low-risk stock in current unstable times with surging interest rates. Hence, I set the recommendation for this stock to "buy". Introducing Check Point Software Check Point Software Technologies (CHKP) is a cybersecurity firm. The firm provides security management services as well as solutions for network, endpoint, cloud, and mobile security. Enterprises, companies, and consumers are all customers of software expert Check Point. According to its annual report of fiscal year 2021, the Americas accounted for 43% of its sales, Europe for 45%, and Asia-Pacific, the Middle East, and Africa for 12%. About 5,000 people work for the company, which has its headquarters in Tel Aviv, Israel. Industry Outlook A few of the factors that drive the market expansion include the proliferation of smart devices, the rise in cyberattacks with the introduction of e-commerce platforms, and the implementation of cloud solutions. Furthermore, with the increased use of devices with IoT and intelligent technology, cyber risks might evolve. In order to identify, mitigate, and limit the danger of cyberattacks, I believe that firms will acquire and deploy sophisticated cybersecurity solutions. According to Fortune Business Insights data, the worldwide cybersecurity market is anticipated to increase at a CAGR of 13.4% from USD 155.83 billion in 2022 to USD 376.32 billion by 2029. Competition The competition in the market for information and network security solutions is fierce, and I believe that, due to the attractiveness of the industry outlook, it will only get fiercer in the coming years. Its rivals in the network security industry include many large companies such as Cisco Systems (CSCO), Fortinet (FTNT), Palo Alto Networks (PANW), and SonicWall ((SNWL)). Regarding certain products that Check Point Software offers, they also face competition from a number of other businesses, including Zscaler (ZS), McAfee, Trend Micro, NortonLifeLock (NLOK), Lookout, Zimperium, CrowdStrike Holdings (CRWD), SentinelOne (S), Sophos Group, Proofpoint, Broadcom (AVGO), Mimecast Limited, and Mandiant (MNDT). Competitive Position I believe that the long operating history of 29 years gives Check Point Software a strong and trusted brand name, which is an important asset in the cybersecurity industry, where trust is one of the key requirements to effectively compete. The long, reliable operating history increases customer loyalty as well. Underpinning this customer royalty, in one of the reviews on Gartner, a user stated that their company has been using Check Point Software for more than 20 years, and very happily so. This is a recurring element in reviews on their solutions. Check Point is known in the industry for especially its robust firewall solutions. Check Point brought the first commercially available firewall to the market and has been continuously fine-tuning the service to this day, resulting in one of the finest products on the market. As a result, for the 22nd time, Check Point Software Technologies has been recognized as a leader in the market for network firewalls by Gartner. Not only experts but also businesses are very keen on the solutions of Check Point, as over 100,000 businesses, including 90% of the Fortune 500, are protected by Check Point in more than 80 countries across the world. The fact that so many large enterprises choose Check Point's solutions out of the many choices available underpins the reputation and, with it, the competitive position of Check Point. Furthermore, many other market analysts have also named Check Point Software as a leader in important segments of the cybersecurity market: Leadership Check Point (Latest annual report) A review comparison of alternatives at Gartner shows that Check Point Software receives high ratings by its users as well. The comparison also shows that a large number of large competitors show a similar or even higher rating, underpinning the fierce competition that Check Point Software finds itself in. For this reason, I don't believe that Check Point will dominate over all of its competitors. Nevertheless, I believe that Check Point’s respected and fine-tuned cybersecurity solutions and trust by enterprises, users, and market experts put them in quite a decent spot in the market competition. Valuation and performance statistics I computed several valuation and performance statistics for Check Point Software and its competitors: index Forward P/E Gross Margin Free Cash Flow Margin 3Y sales growth 3Y EPS growth Debt / Equity Check Point Software 17.04 87.67% 54.98% 4% 5% 0.0 Cisco Systems 12.17 63.14% 26.31% 0% 4315% 0.23 Fortinet 58.82 75.46% 33.83% 22% 25% 4.54 Palo Alto Networks 55.25 69.34% 31.06% 23% - 11.7 Zscaler 140.85 77.38% 19.00% 52% - 1.89 NortonLifeLock 12.32 85.41% 47.32% 4% 3989% nan CrowdStrike 149.25 73.63% 29.45% 80% - 0.7 Broadcom 12.42 64.42% 48.09% 9% 19% 1.88 Mandiant 39.68 46.38% -1.35% -6% - 0.83 Source: Seeking Alpha The competitors can be mainly split into two groups, the low P/E ratio and low revenue growth companies and high P/E ratio and high revenue growth companies, with Check Point Software being in the first group. Check Point Software has the highest gross margin and the highest free cash flow margin in the industry. Furthermore, it is the only company with no debt, which adds safety to owning the stock. As interest rates are rising, owning no debt is currently a huge advantage. Moreover, according to Yahoo Finance, the company has a 5-year monthly beta of 0.62, meaning its market-related price risk is quite low. Also, the company has a huge net cash position of $1.7 billion.

Shareholder Returns

CHKPUS SoftwareUS Market
7D-4.2%4.8%1.0%
1Y-4.1%-17.7%-12.9%

Return vs Industry: CHKP exceeded the US Software industry which returned -17.7% over the past year.

Return vs Market: CHKP exceeded the US Market which returned -12.8% over the past year.

Price Volatility

Is CHKP's price volatile compared to industry and market?
CHKP volatility
CHKP Average Weekly Movement3.5%
Software Industry Average Movement10.7%
Market Average Movement7.9%
10% most volatile stocks in US Market17.1%
10% least volatile stocks in US Market3.2%

Stable Share Price: CHKP is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: CHKP's weekly volatility (4%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
19935,642Gil Shwedhttps://www.checkpoint.com

Check Point Software Technologies Ltd. develops, markets, and supports a range of products and services for IT security worldwide. The company offers a portfolio of network security, endpoint security, data security, and management solutions.

Check Point Software Technologies Fundamentals Summary

How do Check Point Software Technologies's earnings and revenue compare to its market cap?
CHKP fundamental statistics
Market CapUS$14.96b
Earnings (TTM)US$789.70m
Revenue (TTM)US$2.25b

18.9x

P/E Ratio

6.7x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
CHKP income statement (TTM)
RevenueUS$2.25b
Cost of RevenueUS$276.00m
Gross ProfitUS$1.97b
Other ExpensesUS$1.18b
EarningsUS$789.70m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)6.30
Gross Margin87.72%
Net Profit Margin35.15%
Debt/Equity Ratio0%

How did CHKP perform over the long term?

See historical performance and comparison
We’ve recently updated our valuation analysis.

Valuation

Is CHKP undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for CHKP?

Other financial metrics that can be useful for relative valuation.

CHKP key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue5x
Enterprise Value/EBITDA12.5x
PEG Ratio4.1x

Price to Earnings Ratio vs Peers

How does CHKP's PE Ratio compare to its peers?

CHKP PE Ratio vs Peers
The above table shows the PE ratio for CHKP vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average33.7x
NLOK NortonLifeLock
16.2x11.9%US$13.8b
DLB Dolby Laboratories
36.7x23.5%US$7.9b
IS ironSource
84.9x30.8%US$4.9b
VMW VMware
30.2x16.9%US$49.4b
CHKP Check Point Software Technologies
18.9x4.6%US$15.0b

Price-To-Earnings vs Peers: CHKP is good value based on its Price-To-Earnings Ratio (18.9x) compared to the peer average (33.7x).


Price to Earnings Ratio vs Industry

How does CHKP's PE Ratio compare vs other companies in the US Software Industry?

Price-To-Earnings vs Industry: CHKP is good value based on its Price-To-Earnings Ratio (18.9x) compared to the US Software industry average (45.3x)


Price to Earnings Ratio vs Fair Ratio

What is CHKP's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

CHKP PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio18.9x
Fair PE Ratio30.2x

Price-To-Earnings vs Fair Ratio: CHKP is good value based on its Price-To-Earnings Ratio (18.9x) compared to the estimated Fair Price-To-Earnings Ratio (30.2x).


Share Price vs Fair Value

What is the Fair Price of CHKP when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: CHKP ($119.31) is trading below our estimate of fair value ($178.73)

Significantly Below Fair Value: CHKP is trading below fair value by more than 20%.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is less than 20% higher than the current share price.


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Future Growth

How is Check Point Software Technologies forecast to perform in the next 1 to 3 years based on estimates from 24 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


4.6%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CHKP's forecast earnings growth (4.6% per year) is above the savings rate (1.9%).

Earnings vs Market: CHKP's earnings (4.6% per year) are forecast to grow slower than the US market (12.8% per year).

High Growth Earnings: CHKP's earnings are forecast to grow, but not significantly.

Revenue vs Market: CHKP's revenue (4.1% per year) is forecast to grow slower than the US market (7.9% per year).

High Growth Revenue: CHKP's revenue (4.1% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: CHKP's Return on Equity is forecast to be high in 3 years time (32.9%)


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Past Performance

How has Check Point Software Technologies performed over the past 5 years?

Past Performance Score

3/6

Past Performance Score 3/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


0.8%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: CHKP has high quality earnings.

Growing Profit Margin: CHKP's current net profit margins (35.1%) are lower than last year (39.9%).


Past Earnings Growth Analysis

Earnings Trend: CHKP's earnings have grown by 0.8% per year over the past 5 years.

Accelerating Growth: CHKP's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: CHKP had negative earnings growth (-6%) over the past year, making it difficult to compare to the Software industry average (18.5%).


Return on Equity

High ROE: CHKP's Return on Equity (26.1%) is considered high.


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Financial Health

How is Check Point Software Technologies's financial position?

Financial Health Score

6/6

Financial Health Score 6/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: CHKP's short term assets ($2.1B) exceed its short term liabilities ($1.7B).

Long Term Liabilities: CHKP's short term assets ($2.1B) exceed its long term liabilities ($920.6M).


Debt to Equity History and Analysis

Debt Level: CHKP is debt free.

Reducing Debt: CHKP has not had any debt for past 5 years.

Debt Coverage: CHKP has no debt, therefore it does not need to be covered by operating cash flow.

Interest Coverage: CHKP has no debt, therefore coverage of interest payments is not a concern.


Balance Sheet


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Dividend

What is Check Point Software Technologies's current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage

Dividend Yield vs Market

Notable Dividend: Unable to evaluate CHKP's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate CHKP's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if CHKP's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if CHKP's dividend payments have been increasing.


Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as CHKP has not reported any payouts.


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Management

How experienced are the management team and are they aligned to shareholders interests?

3.0yrs

Average management tenure


CEO

Gil Shwed (53 yo)

29.08yrs

Tenure

US$35,500

Compensation

Mr. Gil Shwed is a Co-founder of Check Point Software Technologies Ltd. Mr. Shwed has been Chief Executive Officer of Check Point Software Technologies Ltd. since July 1993 and served as its Executive Chai...


CEO Compensation Analysis

Compensation vs Market: Gil's total compensation ($USD35.50K) is below average for companies of similar size in the US market ($USD13.00M).

Compensation vs Earnings: Gil's compensation has been consistent with company performance over the past year.


Leadership Team

Experienced Management: CHKP's management team is considered experienced (3 years average tenure).


Board Members

Experienced Board: CHKP's board of directors are seasoned and experienced ( 17 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Check Point Software Technologies Ltd.'s employee growth, exchange listings and data sources


Key Information

  • Name: Check Point Software Technologies Ltd.
  • Ticker: CHKP
  • Exchange: NasdaqGS
  • Founded: 1993
  • Industry: Systems Software
  • Sector: Software
  • Implied Market Cap: US$14.963b
  • Shares outstanding: 125.41m
  • Website: https://www.checkpoint.com

Number of Employees


Location

  • Check Point Software Technologies Ltd.
  • 5 Shlomo Kaplan Street
  • Tel Aviv
  • 6789159
  • Israel

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/06 00:00
End of Day Share Price2022/08/05 00:00
Earnings2022/06/30
Annual Earnings2021/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.