June 13, 2024
Top 10 Stock Check Point Software Hold Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Check Point Software – Top 10 Stock in SDG 9: Industry, Innovation and Infrastructure
Check Point Software is listed as a top 10 stock on June 13, 2024 in the market index SDG 9 because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. The company is safely financed and the professional investor sentiment is positive. Both are encouraging signals for a stock purchase decision, albeit at an above-average share price. Based on the Obermatt 360° View of 31 (31% performer), Obermatt assesses an overall hold recommendation for Check Point Software on June 13, 2024.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Systems Software |
| Index | Human Rights, SDG 12, SDG 16, SDG 4, SDG 8, SDG 9, NASDAQ 100, NASDAQ |
| Size class | Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Check Point Software Hold
| 360 METRICS | June 13, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 41 |
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| GROWTH | ||||||||
| GROWTH | 26 |
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| SAFETY | ||||||||
| SAFETY | 96 |
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| SENTIMENT | ||||||||
| SENTIMENT | 56 |
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| 360° VIEW | ||||||||
| 360° VIEW | 31 |
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ANALYSIS: With an Obermatt 360° View of 31 (better than 31% compared with alternatives), overall professional sentiment and financial characteristics for the stock Check Point Software are below the industry average. The 360° View is based on consolidating four consolidated indicators, with half below and half above average for Check Point Software. The consolidated Sentiment Rank has a good rank of 56, which means that professional investors are more optimistic about the stock than for 56% of alternative investment opportunities. It also rates well regarding its financing structure, with the consolidated Safety Rank at 96 or better than 96% of its peers when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the stock is expensive and expects low growth. The consolidated Value Rank is only 41, meaning that the share price of Check Point Software is on the high side, compared with indicators such as revenues, profits, and invested capital. The company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth,and stock returns, with its Growth Rank at 26. ...read more
RECOMMENDATION: With a consolidated 360° View of 31, Check Point Software is worse than 69% of all alternative stock investment opportunities based on the Obermatt Method. As only half of the consolidated Obermatt Ranks exhibit excellent performance, namely the positive professional market sentiment (Sentiment Rank of 56) and safe financing practices (Safety Rank of 96), the case for investing in this stock needs further thought. The Value and the Safety Ranks are below average. The Safety Rank is the least critical of the four consolidated ranks, because it only reflects financing practices. So the question is: How to assess below-average value against above-average sentiment? This may be a case where growth is in the future, not yet reflected in current performance. Companies that might fall into this category are those with intellectual property, such as technology and pharmaceutical companies. In early phases, they are expensive relative to their size and have a lot of capital on their books, as is the case here. Investors expect a better future and are willing to pay a higher price than is warranted by the current company size. These higher prices drive stock price value down in the short term. In this case, future growth may be the strongest driver of the investment case, reflected by institutional investors' opinions. With a weak Value Rank, the question is how much to sacrifice value at the cost of positive sentiment. Sometimes market sentiment is just hype, but sometimes it is right. You pay more than market-average for this stock, but it may be worth it, if the future of Check Point Softwarẹ is bright. Prudent investors may only want to invest a smaller portion of their wealth in such situations. Young investors can carry more risk but should still thrive for sufficient diversification. ...read more
Sentiment Strategy: Professional Market Sentiment for Check Point Software positive
ANALYSIS: With an Obermatt Sentiment Rank of 56 (better than 56% compared with alternatives), overall professional sentiment and engagement for the stock Check Point Software is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Check Point Software. Analyst Opinions are at a rank of 27 (worse than 73% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 50, which means that stock research experts are more positive in their investment recommendations in the company. In other words, they are getting more optimistic of stock investments in Check Point Software. More encouragingly, the Professional Investors rank is 83, which means that professional investors hold more stock in this company than in 83% of alternative investment opportunities. Pros tend to favor investing in this company. But Market Pulse is on the lower side with a rank of 45, which means that the current professional news and professional social networks are on the negative side when discussing this company (more negative news than for 55% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 56 (more positive than 56% compared with investment alternatives), Check Point Software has a reputation among professional investors that is above-average compared with that of its competitors. The sentiment signals are mixed for Check Point Software. While analysts and the news channels are negative, there is a change in what analysts think. Above-average institutional investors in this company support them. Sentiment signals remain mixed with analysts and news channels pessimistic, though improving, and professional investors above average. ...read more
Value Strategy: Check Point Software Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 41 (worse than 59% compared with alternatives), Check Point Software shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Check Point Software. Price-to-Profit (also referred to as price-earnings, P/E) is 78 which means that the stock price compared with what market professionals expect for future profits is lower than for 78% of comparable companies, indicating a good value concerning Check Point Software's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 55, which means that the stock price is lower as regards to invested capital than for 55% of comparable investments. On the other hand, Price-to-Sales is less favorable than for 66% of alternatives (only 34% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than for 99% of comparable companies, making the stock more expensive compared with the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 41, is a hold recommendation based on Check Point Software's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high concerning expected revenues, the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting Group or BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than distribute it to shareholders through dividends, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. ...read more
Growth Strategy: Check Point Software Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 26 (better than 26% compared with alternatives), Check Point Software shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below average for Check Point Software. Sales Growth has a below market rank of 24, which means that, currently, professionals expect the company to grow less than 76% of its competitors. The same is valid for Capital Growth, with a rank of 41, and Profit Growth, with a rank of 18. Currently, professionals expect the company to grow its profits less than 82% of its competitors). Only shareholders are optimistic. Stock Returns are above average at a rank of 64, which means that the stock returns have recently been above 64% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 26, is a hold recommendation for growth and momentum investors. That picture may be the result for a company that has reached the bottom. All went south for Check Point Software, and it still looks bad, but some investors already see light at the end of the tunnel, rewarding the stock with recent above-market stock returns. It could also mean that investors are correcting an overreaction to negative news. If that were the case, the positive stock returns are not yet a sign of recovery. Investors should look closely at the Value and Sentiment indicators before they make a stock purchasing decision, because growth is unlikely to be the driving argument behind this investment. ...read more
Safety Strategy: Check Point Software Debt Financing Safety very solid
| SAFETY METRICS | June 13, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 100 |
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| REFINANCING | ||||||||
| REFINANCING | 23 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 69 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 96 |
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ANALYSIS: With an Obermatt Safety Rank of 96 (better than 96% compared with alternatives) for 2022, the company Check Point Software has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Check Point Software is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above average for Check Point Software. Leverage is at a rank of 100, meaning the company has a below-average debt-to-equity ratio. It has less debt than 100% of its competitors. Liquidity is also good at a rank of 69, meaning the company generates more profit to service its debt than 69% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 23, which means that the portion of the debt that is about to be refinanced is above-average. It has more debt in the refinancing stage than 77% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 96 (better than 96% compared with alternatives), Check Point Software has a financing structure that is significantly safer than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for Check Point Software. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. ...read more
Combined financial peformance: Check Point Software Top Financial Performance
| COMBINED PERFORMANCE | June 13, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 41 |
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| GROWTH | ||||||||
| GROWTH | 26 |
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| SAFETY | ||||||||
| SAFETY | 69 |
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| COMBINED | ||||||||
| COMBINED | 76 |
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ANALYSIS: With an Obermatt Combined Rank of 76 (better than 76% compared with investment alternatives), Check Point Software (Systems Software, USA) shares have much better financial characteristics than comparable stocks. Shares of Check Point Software are low in value (priced high) with a consolidated Value Rank of 41 (worse than 59% of alternatives) and show below-average growth (Growth Rank of 26) but are safely financed (Safety Rank of 96), which means low debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 76, is a strong buy recommendation based on Check Point Software's financial characteristics. As the company Check Point Software's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 41) and low growth (Obermatt Growth Rank of 26), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. In this case, good financing practices (Obermatt Safety Rank of 96) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. ...read more
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