Back in the day, Check Point Software (Nasdaq:CHKP) was in that rarefied sphere of must-have tech stocks. Unlike many of its peers from that era, though, this computer hardware/software developer has not only stayed in the game but continued to prosper as a leader in the network and gateway security field. However, Check Point's valuation has long since come back to more reasonable levels, and it may be time for investors to give this name a serious look.
A Solid Start to the Year
Check Point did not blow the doors off the quarter with a financial report that will send its analysts into hyperventilation, but it was a solid quarter all the same. Revenue grew 15% for the period and surpassed the high end of the range, as product revenue rose almost 16% to $105 million. Deferred revenue performance was not quite as impressive; it rose 10% for the quarter to more than $460 million and slipped about 1% on a sequential basis.
Where Check Point really continues to impress is in its profitability. Gross margin (on a GAAP basis) climbed almost a full point to an eye-popping 85.9%. Operating income is likewise impressive; GAAP operating income rose 22% to over $141 million, while the operating margin was 50.2%. (For more, see The Bottom Line On Margins.)
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