This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Check Point Leaves Investors Feeling Insecure

NEW YORK ( TheStreet) -- Competition in the enterprise security market has become fierce. While Check Point Software (CHKP - Get Report) has a respectable track record that shows it understands the growing needs of its customers, the company is finding it challenging to stave off rivals such as Cisco (CSCO - Get Report) and Fortinet (FTNT - Get Report), which are gunning for its business. Going into its Q3 report, investors wanted to see that Check Point provided enough "oomph" to help them feel more secure about its prospects.

Breach In Growth Momentum

For its third quarter, Check Point earned $152.4 million, or 73 cents per share on revenue of $332.4 million. While the revenue total arrived slightly below estimates of $333 million, it did show 8% year over year from $308.3 million. Likewise, net income of $152.4 million was 14% higher from the same period of a year ago. The company attributed the improved results to growing demand for its Internet security software. Check Point's chairman and CEO, Gil Shwed offered this:
Third quarter results continued to be good with healthy growth in enterprise appliance units and software blade sales. Our revenues and earnings per share came in at the upper half of our projections. Geographically, North America continued to deliver great results with double digit growth in product and service revenues.

The numbers were impressive. However, this was not enough to prevent a selloff in the stock immediately after the company issued guidance for the fourth quarter. Investors were displeased with the revenue range of $355 million to $387 million. On average, analysts projected $382 million. Similarly, the low end of Check Point's adjusted earnings projections of 84 cents was significantly below analysts' expectations of 90 cents per share. As a result, the stock plummeted almost 13%.

Concerns regarding Europe have a lot to do with the company's conservative guidance. This seems to be consistent with rival Fortinet, which cut full-year projections just the day prior due to weak demand in China and Europe - sending shares down almost 20%.

Moving Forward

Overall, Check Point reported a solid quarter. In light of the ongoing fiscal concerns with Europe, I think the company has taken the right approach with its guidance. However, the bigger issue with Check Point will come from the competition -- in particular, from the likes of enterprise security darling Palo Alto Networks (PANW - Get Report). In its first quarter as a public company, Palo Alto did what it had to do to affirm investor confidence in its business.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
DELL $0.00 0.00%
CHKP $80.52 0.00%
CSCO $25.76 0.00%
FTNT $43.68 0.00%
PANW $175.21 0.00%


Chart of I:DJI
DOW 16,472.37 +200.36 1.23%
S&P 500 1,951.36 +27.54 1.43%
NASDAQ 4,707.7750 +80.6910 1.74%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs