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Is a Beat Likely for Check Point (CHKP) in Q4 Earnings?

Check Point Software Technologies CHKP is likely to beat expectations when it reports fourth-quarter fiscal 2022 results before market open on Feb 13.

For the fourth quarter, Check Point projects revenues between $608 million and $658 million ($633 million at the midpoint). The Zacks Consensus Estimate for revenues is pegged at $633.6 million, suggesting a 5.8% increase from the year-ago quarter’s reported figure.

Additionally, CHKP forecasts adjusted earnings per share in the range of $2.22-$2.42 ($2.32 at the midpoint). The consensus mark for earnings stands at $2.35 per share, 4.4% higher than the year-ago quarter’s earnings of $2.25.

The company’s earnings outpaced estimates in the trailing four quarters, the average surprise being 3.6%.

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Let’s see how things have shaped up before this announcement.

Check Point Software Technologies Ltd. Price and EPS Surprise

Check Point Software Technologies Ltd. price-eps-surprise | Check Point Software Technologies Ltd. Quote

Factors to Note Ahead of Q4 Earnings

The hybrid work environment has urged the greater need for network security. This trend is anticipated to have fueled the demand for Check Point’s products during the quarter under review.

Moreover, the increased demand for network security gateways to support higher capacities amid the hybrid work environment is expected to have spurred the demand for CHKP’s remote access VPN (virtual private network) solutions.

Additionally, Check Point’s quarterly performance is likely to have benefited from increased security subscriptions due to the solid demand for its CloudGuard, Harmony, Sandblast Zero-day threat prevention and Infinity solutions.

However, the weakening global economy amid ongoing macroeconomic and geopolitical issues led enterprises to postpone their large IT spending plans. This might have hurt Check Point’s top line in the fourth quarter. Additionally, the firm’s elevated investments in sales and marketing efforts might have clipped margins during the quarter to be reported.

Earnings Whispers

Our proven model predicts an earnings beat for Check Point this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate ($2.38 per share) and the Zacks Consensus Estimate ($2.35 per share), is +1.22%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: CHKP carries a Zacks Rank #3.

Other Stocks With the Favorable Combination

Per our model, Vipshop Holdings VIPS, Cisco Systems CSCO and Applied Materials AMAT also have the right combination of elements to post an earnings beat in their upcoming releases.

Vipshop sports a Zacks Rank #1 and has an Earnings ESP of +1.01%. The company is expected to report fourth-quarter 2022 results on Feb 22. Its earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing the same on one occasion, the average surprise being 20.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Vipshop’s fourth-quarter earnings stands at 50 cents per share, implying a year-over-year increase of 22%. It is estimated to report revenues of $4.42 billion, which suggests a decline of 15.6% from the year-ago quarter.

Cisco carries a Zacks Rank #3 and has an Earnings ESP of +1.66%. The company is slated to report second-quarter fiscal 2023 results on Feb 15. Its earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 2.1%.

The Zacks Consensus Estimate for CSCO’s fiscal second-quarter earnings is pegged at 86 per share, indicating a year-over-year increase of 2.4%. The consensus mark for revenues stands at $13.43 billion, suggesting a year-over-year increase of 5.6%.

Applied Materials is slated to report first-quarter fiscal 2023 results on Feb 16. The company has a Zacks Rank #3 and an Earnings ESP of +0.42% at present. AMAT’s earnings beat the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same on one occasion, the average surprise being 6.8%.

The Zacks Consensus Estimate for first-quarter earnings is pegged at $1.93 per share, suggesting an increase of 2.1% from the year-ago quarter’s earnings of $1.89. Applied Materials’ quarterly revenues are estimated to increase 6.6% year over year to $6.69 billion.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report

Check Point Software Technologies Ltd. (CHKP) : Free Stock Analysis Report

Applied Materials, Inc. (AMAT) : Free Stock Analysis Report

Vipshop Holdings Limited (VIPS) : Free Stock Analysis Report

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