Check Point Software Technologies (CHKP) Highlighted As Weak On High Volume

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Check Point Software Technologies ( CHKP) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Check Point Software Technologies as such a stock due to the following factors:

  • CHKP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $73.6 million.
  • CHKP has traded 639,749 shares today.
  • CHKP is trading at 8.90 times the normal volume for the stock at this time of day.
  • CHKP is trading at a new low 4.01% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on CHKP:

Check Point Software Technologies Ltd. develops, markets, and supports a range of software, combined hardware, and software products and services for information technology (IT) security worldwide. CHKP has a PE ratio of 24. Currently there are 14 analysts that rate Check Point Software Technologies a buy, no analysts rate it a sell, and 8 rate it a hold.

The average volume for Check Point Software Technologies has been 1.1 million shares per day over the past 30 days. Check Point Software has a market cap of $16.0 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.00 and a short float of 1.3% with 2.81 days to cover. Shares are up 9.2% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Check Point Software Technologies as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 3.8%. Since the same quarter one year prior, revenues slightly increased by 8.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • CHKP has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, CHKP has a quick ratio of 1.66, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Software industry and the overall market, CHECK POINT SOFTWARE TECHN's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for CHECK POINT SOFTWARE TECHN is currently very high, coming in at 89.58%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 43.18% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 70.10% to $297.09 million when compared to the same quarter last year. In addition, CHECK POINT SOFTWARE TECHN has also vastly surpassed the industry average cash flow growth rate of -16.85%.

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