Check Point Software Technologies Limited (CHKP), the Internet security manufacturer, recently surprised on first-quarter estimates by 7.69% as revenue rose 2%. It was the third surprise out of the last four quarters. CHKP has a forward P/E of 12.96.

Company Description

Check Point Software provides computer protection from internet hackers, spyware and identity thieves. It has been a pioneer in firewall protection and patented stateful inspection technology. The company’s customers include Fortune 100 companies and smaller businesses and organizations.

Check Point Has Record First Quarter

On Apr 27, Check Point Software reported better than expected first-quarter 2009 results which surprised on analysts’ estimates by 7.69%. Adjusted earnings per share were 42 cents compared to analysts’ estimates of 39 cents.

Revenues rose 2% to $195 million from $191.6 million in the year ago period. Check Point launched new software blade architecture in the first quarter designed to provide a total security solution.

Cash flow rose 20% to $171.8 million compared to $142.9 million in the first quarter of 2008. The company also had $1.590.8 billion in cash and investments at the end of the quarter.

Share Repurchase Program

During the quarter, Check Point continued to repurchase shares as part of its ongoing share repurchase program. It bought back 2.3 million shares at a cost of $52.3 million in the quarter.

Consensus Estimates Rise

Covering analysts have yet to adjust earnings estimates to reflect the first quarter but second-quarter estimates have jumped 1 cent to 42 cents in the last week as 1 covering analyst out of 8 raised estimates.

2009 estimates also rose by a penny to $1.68 per share in the last 7 days.

Value Fundamentals

Check Point Software Technologies is a Zacks #1 Rank (strong buy) stock. It has a forward P/E of 12.96 and a price-to-book ratio of 2.35. The company has a strong 5-year average return on equity (ROE) of 17.93%.

Zacks Investment Research
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