CHKP Stock Study (1-7-26)
Posted by Mark on May 27, 2025 at 07:03 | Last modified: January 7, 2026 14:42I recently studied Check Point Software Technologies, Ltd. Inc. (CHKP, $186.01). The previous study is here.
M* writes:
> Check Point Software Technologies is a pure-play cybersecurity
> vendor. The company offers solutions for network, endpoint,
> cloud, and mobile security in addition to security management.
> Check Point, a software specialist, sells to enterprises,
> businesses, and consumers. Around 50% of revenue is generated
> in Europe, the Middle East, and Africa, 40% from the Americas,
> and 10% from the Asia-Pacific region. The firm, based in Tel
> Aviv, Israel, was founded in 1993 and has about 5,000 employees.
Over the past decade, this medium-size company has grown sales and EPS at annualized rates of 4.9% and 7.5%, respectively. Lines are up, straight, and parallel (PTP mostly flat). Value Line (VL) gives an impressive Earnings Predictability score of 100.
Over the past decade, PTPM leads peer averages but trails the industry while decreasing from 53.6% to 37.9% (’24) with last-5-year mean of 41.8%. ROE leads peer and industry averages while increasing from 16.6% to 28.6% (’24) with last-5-year mean of 26.3%. Debt-to-Capital is less than peer and industry averages as it has no long-term debt (and only $6.3M annual rentals per VL).
Quick Ratio is 1.1 and Interest Coverage N/A (consistent with zero long-term debt) per M* who assigns “Narrow” Economic Moat and gives an A grade for Financial Health (per BI website). VL rates the company A+ for Financial Strength.
With regard to sales growth:
- YF gives YOY ACE 6.3% and 6.1% for ’25 and ’26, respectively (based on 34 analysts).
- Zacks gives YOY ACE 6.3% and 6.2% for ’25 and ’26, respectively (12 analysts).
- VL projects 6.4% annualized growth from ’24-’29.
- CFRA projects 6.4% YOY and 6.2% per year for ’25 and ’24-’26, respectively.
- M* gives 2-year ACE of 56.9%/year but projects 5.2%/year for next five years in Equity Report.
My 5.0% forecast is below the range.
With regard to EPS growth:
- MarketWatch projects 4.5% and 8.4% per year for ’24-’26 and ’24-’27, respectively (based on 38 analysts).
- Nasdaq.com gives ACE contraction of 9.1% YOY and 2.2%/year for ’26 and ’25-’27 (11/12/4 analysts for ’25/’26/’27).
- Seeking Alpha projects 4-year annualized growth of 6.4%.
- Argus projects 5-year annualized growth of 7.0%.
- Finviz gives ACE 5-year annualized growth of 8.2% (10).
- LSEG estimates LTG at 7.4%.
- YF gives YOY ACE 23.0% growth and 6.4% contraction for ’25 and ’26, respectively (35).
- Zacks gives YOY ACE 23.1% growth and 6.2% contraction for ’25 and ’26 (12) along with 5-year growth of 6.4%/year.
- VL projects 12.0% annualized growth from ’24-’29.
- CFRA projects growth of 23.3% YOY and 8.8% per year for ’25 and ’24-’26 along with 3-year CAGR of 9.0%.
- M* gives long-term growth ACE of 7.6% and projects 10.2%/year in Equity Report.
My 5.0% forecast is below the long-term estimate range (average of eight: 6.9%). Initial value is ’24 EPS of $7.46/share instead of 2025 Q3 EPS of $9.11 (TTM).
My Forecast High P/E is 21.0. Over the past 10 years, high P/E ranges from 21.5 in ’16 to 28.2 in ’24 with a last-5-year mean of 23.9 and a last-5-year-mean average P/E of 20.8 (excluding ’20 low P/E outlier of 13.4). I am below the range.
My Forecast Low P/E is 16.0. Over the past 10 years, low P/E ranges from 16.5 in ’23 (excluding 2020 outlier of 13.4) to 19.5 in ’24 with a last-5-year mean of 17.7. I am forecasting below the range.
My Low Stock Price Forecast (LSPF) is $130.00. Default based on initial value given above ($119.40) seems extremely low at 35.8% less than previous close and 33.1% less than 52-week low. My arbitrary selection is 30.1% (27.2%) less, respectively.
These inputs land CHKP in the SELL zone with a U/D ratio of 0.2. Total Annualized Return (TAR) is 1.5%.
PAR (using Forecast Average—not High—P/E) of -1.1% is unthinkable for an investment candidtate. If a healthy margin of safety (MOS) anchors this study, then I can proceed based on TAR but even that is far below the risk-free rate (T-Bills).
To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on only 14 studies in the past 90 days (my study and 7 other outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 5.4%, 7.7%, 23.9, and 16.8, respectively. Although MS sample size precludes anything but anecdotal comparison, I am lower across the board. VL projects a future average annual P/E of 21.0 that is greater than MS (20.4) and greater than mine (18.5).†
MS high / low EPS are $12.28 / $8.35 versus my $9.52 / $7.46 (per share). My high EPS is less due to a lower growth rate an initial value. VL’s (M*) high EPS of $16.15 ($15.36) soars above both.
MS LSPF of $140.00 is about equal to the default $8.35/share * 16.8 = $140.28. MS LSPF is 7.7% higher than mine.
MOS is robust in the study because my inputs are near or below historical/analyst/MS averages/ranges. Also suggestive of this assessment are MS TAR exceeding mine by 7.2% per year and my lower LSPF.
With regard to valuation, PEG is 2.2 (2.8) and 3.9 per Zacks (M*) and my projected P/E, respectively: all overvalued. Relative Value [(current P/E) / 5-year-mean average P/E] is fair at 0.98 (M* agrees). Interestingly, the “Quick and Dirty DCF” says undervalued by 49%.
Per U/D, CHKP is a BUY under $147.50/share despite its recent close near 52-week lows. Given a forecast high price ~$200, BI TAR criterion would be met [199.9 / ((14.87 / 100 ) +1 ) ^ 5] ~ $100 (no dividend).
A 90-day free trial to BetterInvesting® may be secured here (also see link under “Pages” section at top right of this page).
† — At 9.2, M* is outlandishly low by comparison. I will e-mail M* to inquire since I have also seen this with other stocks.