Welcome Back Checkpoint
Written by: Aaron Katsman | July 25, 2007
By Aaron Katsman
IsraelNewsletter.com
Check Point Software Technologies Ltd. (CHKP), which makes information technology security hardware and software, has finally provided investors with some good news. After having the stock basically go nowhere over the last 2.5 years, yesterday’s earnings report was an welcome change from the past few quarters of slow growth.
For the quarter that ended June 30, Check Point reported net income of $69.5 million, or 31 cents per share, compared with $65.7 million, or 27 cents per share, in the same quarter last year. Check Point’s revenue for the quarter totaled $176.2 million, compared with $138.9 million in the year-ago quarter.
They experienced solid double digit growth in both network and data security units, as well as doubling services revenue to $32.9 million. This has clearly become a strong growth driver for the company and I would look for continued growth in this unit.
They also announced that they had bought back 2.1 million shares and raised estimates for the rest of the year. The company is still sitting on lots of cash and the question remains what they plan to do with it. Are they going to make a purchase? Keep buying back stock? Pay a dividend? Or are they going to be bought?
They have been mentioned as a takeover target but my answer to all these questions is that they are going to keep trying to grow the business, probably through acquisition. Gil Schwed beleives that he can find the right acquisition and the return on it will be more than the 1.5% dividend for investors. He’s probably correct. Much of this quarter’s strong growth is a result of previous acquisitions finally coming home to roost.
Stockerblog likes Checkpoint as a way to secure your portfolio and I think he is right on. It appears that the company is back on track producing strong growth and that should put a smile on investors faces.
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Disclosure: Author’s fund is long CHKP as of 7/25/07.
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Aaron Katsman is the lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.
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