What's In The Cards For Check Point (CHKP) In Q4 Earnings?

Check Point Software Technologies Ltd. (NASDAQ:CHKP) is scheduled to report fourth-quarter 2017 results on Jan 31. Last quarter, the company delivered a positive earnings surprise of 4.8%. Notably, Check Point Software has outperformed the Zacks Consensus Estimate in each of the trailing four quarters, generating an average positive surprise of 6.7%.

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

Factors to Consider

Check Point Software is anticipated to benefit from strong demand for cybersecurity solutions. During the soon-to-be reported quarter, the company’s flagship product, SandBlast Security was adopted by Mississippi Secretary of State for ensuring end-to-end cybersecurity.

In the month of October, Check Point discovered a vulnerability called HomeHack that exposed LG SmartThinQ users to security threats and LG came up with patches for the same. We note that in August, the company had teamed up with LG Electronics for detecting security issues in the latter’s systems.

Furthermore, the rapid adoption of Check Point’s data-center appliances and the continued enhancements in the data-center product lines are estimated to provide adequate support to revenue growth.

However, in spite of these positives, Check Point’s soft fourth quarter outlook is a concern. The company on its third-quarter earnings conference call hinted that its fourth-quarter revenues might be hit by significant changes in U.S. sales force, which may take some time to reach its full potential.

Additionally, the company’s overdependence on distribution channels keeps us apprehensive as this increases customer concentration risk.

What to Expect?

The Zacks Consensus Estimate for the fourth quarter is pegged at $1.51, which represents a meager 3.4% increase from the year-ago figure. We note that the Zacks Consensus Estimate has remained unchanged over the past 30 days. Additionally, analysts polled by Zacks project revenues of roughly $508.6 million, up 4.5% from the year-ago quarter.

What the Zacks Model Unveils?

Our proven model does not conclusively show that Check Point is likely to beat earnings this quarter as it does not possess the key components. 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Check Point carries a Zacks Rank #4 (Sell) and has an Earnings ESP of -0.13%.

Some Stocks With a Favorable Combination

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Facebook, Inc. (NASDAQ:FB) has an Earnings ESP of +0.68% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Microsoft Corporation (NASDAQ:MSFT) has an Earnings ESP of +0.21% and a Zacks Rank #3.

Apple Inc. (NASDAQ:AAPL) has an Earnings ESP of +1.56% and a Zacks Rank #3.

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