Check Point Software Technologies Ltd (NASDAQ: CHKP)

Sector: Technology Industry: Software - Infrastructure CIK: 0001015922
Market Cap 17.71 Bn
P/B 6.14
P/E 16.75
P/S 6.50
ROIC (Qtr) 24.31
Div Yield % 0.00
Rev 1y % (Qtr) 5.85
Total Debt (Qtr) 1.97 Bn
Debt/Equity (Qtr) 0.68
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About

Check Point Software Technologies Ltd (CHKP) is a prominent player in the cybersecurity industry, providing security solutions for various types of organizations across 88 countries. The company's main business activities involve delivering collaborative security across an organization's security architecture, including the network, cloud, and workspace. Check Point's product and service offerings are designed to provide threat prevention, detection, and response capabilities. Check Point's revenue is generated primarily through its comprehensive...

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Investment thesis

Bull case

  • Strong operating cash flow of 1.23B provides robust 0.63x coverage of total debt 1.97B, indicating excellent debt servicing capability and financial flexibility.
  • Strong tangible asset base of 5.69B provides 2.88x coverage of total debt 1.97B, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 1.21B exceeds capital expenditure of 26.60M by 45.40x, indicating strong organic growth funding capability.
  • Long-term investments of 1.33B provide solid 0.67x coverage of long-term debt 1.97B, indicating strategic financial planning.
  • Retained earnings of 15.07B provide full 7.64x coverage of long-term debt 1.97B, indicating strong internal capital position.

Bear case

  • Operating cash flow of 1.23B barely covers its investment activities of (459.60M), with a coverage ratio of -2.69, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (459.60M) provide weak support for R&D spending of 456.70M, which is -1.01x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 1.80B provide limited coverage of acquisition spending of (273.10M), which is -6.59x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 1.23B provides insufficient coverage of deferred revenue obligations of 2.18B, which is 0.57x, raising concerns about future service delivery capabilities.
  • Operating cash flow of 1.23B provides minimal -11.04x coverage of tax expenses of (111.80M), suggesting potential tax planning inefficiencies or unsustainable tax positions.

Peer comparison

Companies in the Software - Infrastructure
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MSFT Microsoft Corp 2,948.93 Bn 24.73 9.65 57.61 Bn
2 ORCL Oracle Corp 734.55 Bn 67.24 19.76 124.39 Bn
3 PLTR Palantir Technologies Inc. 313.28 Bn 192.78 70.00 0.23 Bn
4 PANW Palo Alto Networks Inc 109.38 Bn 97.90 11.45 0.35 Bn
5 CRWD CrowdStrike Holdings, Inc. 102.48 Bn -326.20 22.45 0.82 Bn
6 SNPS Synopsys Inc 69.14 Bn 51.90 9.80 14.29 Bn
7 NET Cloudflare, Inc. 66.52 Bn -645.60 33.04 3.50 Bn
8 FTNT Fortinet, Inc. 62.73 Bn 33.48 9.57 1.00 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.19 2.10
EV to Cash from Ops. EV/CFO 13.84 3.92
EV to Debt EV to Debt 8.66 -2.43
EV to EBIT EV/EBIT 18.08 11.57
EV to EBITDA EV/EBITDA 18.49 18.19
EV to Free Cash Flow [EV/FCF] EV/FCF 14.15 19.98
EV to Market Cap EV to Market Cap 0.96 1.27
EV to Revenue EV/Rev 6.27 29.29
Price to Book Value [P/B] P/B 6.14 4.97
Price to Earnings [P/E] P/E 16.75 -12.45
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 0.21
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 2.73
Dividend per Basic Share Div per Share (Qtr) 0.00 0.11
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 1.67
Interest Coverage Interest Coverage 0.00 -16.04
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -9.92 -403.22
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 255.59 223.80
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -0.28
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 24.97 585.97
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -3.71 5.89
EBIT Growth (1y) % EBIT 1y % (Qtr) -2.78 27.96
EBT Growth (1y) % EBT 1y % (Qtr) -2.78 20.61
EPS Growth (1y) % EPS 1y % (Qtr) 28.76 144.77
FCF Growth (1y) % FCF 1y % (Qtr) 16.72 50.30
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 5.25 45.98
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.35 0.65
Cash Payout Ratio Cash Payout Ratio 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 0.93 1.23
Current Ratio Curr Ratio (Qtr) 2.05 2.63
Debt to Equity Ratio Debt/Equity (Qtr) 0.68 0.73
Interest Cover Ratio Interest Cover Ratio 0.00 -16.04
Times Interest Earned Times Interest Earned 0.00 -16.04
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 38.10 -549.97
EBIT Margin % EBIT Margin % (Qtr) 34.68 -240.33
EBT Margin % EBT Margin % (Qtr) 34.68 -608.68
Gross Margin % Gross Margin % (Qtr) 86.70 51.14
Net Profit Margin % Net Margin % (Qtr) 38.80 -611.28