Check Point (CHKP) To Post Q1 Earnings: What To Expect?

Check Point Software Technologies Ltd. (NASDAQ:CHKP) is scheduled to report first-quarter 2017 results on Apr 27. Last quarter, the company posted a positive earnings surprise of 15.65%. Notably, Check Point Software outperformed the Zacks Consensus Estimate thrice, while matching the same once, over the trailing four quarters. It has an average positive earnings surprise of 6.02%.

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

Factors to Consider

We believe that Check Point Software will continue to benefit from strong demand for cybersecurity solutions. It should be noted that the financial well-being, brand image, and reputation of enterprises and governments are always exposed to the risk of cyber threats. Consequently, cybersecurity has become a mission-critical, high-profile requirement.

With rapid technological advancement, organizations are increasingly adopting the “bring your own device” (BYOD) policy to enhance employee productivity with anytime/anywhere access. This trend, in turn, calls for stricter data security measures.

Moreover, various independent research firms had forecast strong demand in 2017. Gartner had predicted that worldwide Information Security Spending would reach $90 billion in 2017, marking 7.6% growth from the 2016 level of approximately $83.6 billion.

We believe that Check Point Software must have capitalized on this opportunity and anticipate that this might be well reflected in the company’s results in the quarter to be reported.

Furthermore, the rapid adoption of Check Point’s data center appliances and the consistent enhancements in data center product lines are anticipated to provide adequate support to revenue growth. Additionally, the company’s continuous share buybacks bode well for investors.

However, competition from Cisco, Juniper Networks (NYSE:JNPR) and Fortinet (NASDAQ:FTNT) , an uncertain economic environment and currency headwinds remain concerns.

Check Point Software Technologies Ltd. Price and EPS Surprise

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

Earnings Whispers

Our proven model does not conclusively show that Check Point Software 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 are pegged at $1.07. Hence, the difference is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Check Point Software carries a Zacks Rank #3. Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.

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

Stocks to Consider

Here are a couple of stocks, which you may consider as our model shows that they have the right combination of elements to post an earnings beat in their upcoming releases:

Seagate Technology plc (NASDAQ:STX) , with an Earnings ESP of +3.77%, and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fiserv Inc. (NASDAQ:FISV) , with an Earnings ESP of +0.85% and a Zacks Rank #2.

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