It has been about a month since the last earnings report for Check Point Software (CHKP). Shares have added about 4.4% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Check Point Software Q3 Earnings Match Estimates, Revenues Miss

Check Point Software Technologies reported third-quarter 2024 results, wherein the bottom line match the Zacks Consensus Estimate while top-line missed estimates by 0.5%.

This IT security solutions provider reported non-GAAP earnings of $2.25 per share. The bottom line increased 9% from the year-ago quarter’s earnings of $2.07 per share.

Check Point’s quarterly revenues increased 7% year over year to $635 million.  This upside was driven by double-digit growth in Harmony Email and Infinity Platform revenues.

Quarterly Details of CHKP

Security subscription revenues were $277 million, which increased 12% year over year, driven by the acquisition of Cyberint. This expanded the product offering into the Security Operation Center market. A strong demand for the Harmony product family also aided. Our model estimate for security subscription revenues was pegged at $281 million, up 16.5% year over year.

Products and licenses revenues increased 4.2% year over year to $118.9 million. Our model estimate for products and licenses revenues was pegged at $116 million, which remained unchanged year over year. 

Total revenues from product and security subscriptions were $635.1 million, up 6.5% year over year.

Software updates and maintenance revenues increased to $239.3 million from $233.8 million reported in the year-ago quarter. Our model estimate for software updates and maintenance revenues was pegged at $238 million.

As of Sept. 30, 2024, deferred revenues were $1.745 billion, up 2% year over year.
Non-GAAP operating income for the third quarter of 2024 totaled $274 million, up from $269 million reported in the year-ago quarter. Non-GAAP operating margin was 43%, which declined 2% year over year.

Check Point’s Balance Sheet & Other Details

Check Point exited the third quarter with cash and cash equivalents, marketable securities and short-term deposits of $2.87 billion compared with the previous quarter’s $2.98 billion.

The company generated cash worth $249 million from operational activities in the third quarter of 2024. CHKP acquired Cyberint for $186 million net cash consideration in the third quarter of 2024, the cost of which was insignificant. 

It repurchased approximately 1.79 million shares for about $325 million in the reported quarter.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

VGM Scores

At this time, Check Point has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly 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.

Performance of an Industry Player

Check Point is part of the Zacks Computers - IT Services industry. Over the past month, Roper Technologies (ROP), a stock from the same industry, has gained 3.1%. The company reported its results for the quarter ended September 2024 more than a month ago.

Roper Technologies reported revenues of $1.76 billion in the last reported quarter, representing a year-over-year change of +12.9%. EPS of $4.62 for the same period compares with $4.32 a year ago.

Roper Technologies is expected to post earnings of $4.72 per share for the current quarter, representing a year-over-year change of +8%. Over the last 30 days, the Zacks Consensus Estimate has changed 0%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Roper Technologies. Also, the stock has a VGM Score of D.

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