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Check Point Software (CHKP) Stock Slips Despite Earnings Beat

  • Check Point Software (CHKP) is trending after reporting an earnings and revenue beat amid what the company called “healthy cybersecurity demand.”
  • However, Check Point only barely topped Wall Street's top- and bottom-line estimates.
  • CHKP stock fell in early trading today.
CHKP stock - Check Point Software (CHKP) Stock Slips Despite Earnings Beat

Source: jejim / Shutterstock.com

Check Point Software (NASDAQ:CHKP) released its second-quarter 2022 financial results today. The company exceeded Wall Street’s forecasts for both revenue and profits. Nevertheless, CHKP stock dropped as traders weighed Check Point’s results.

Check Point Software describes itself as “one of the largest pure-play security vendors globally.” The company’s market capitalization of nearly $15 billion indicates that it’s not gigantic, but not tiny either.

On most days, Check Point Software isn’t a hot topic of conversation among financial traders. However, the company was the focus of attention this morning — but not necessarily in a good way — as Check Point posted its Q2 2022 financial data.

At first glance, the results seem perfectly acceptable. Check Point Software grew its revenue 9% year-over-year (YOY) to $571 million. Also, the company reported non-GAAP earnings per share (EPS) of $1.64, representing a 2% YOY increase.

Chief Executive Gil Shwed was evidently proud of Check Point Software’s top- and bottom-line growth. “The demand for cyber has remained healthy in the last year, and I hope it will stay that way,” Shwed stated.

What’s Happening With CHKP Stock?

Shwed’s optimism wasn’t reflected in the price action of CHKP stock today, however. By 11:00 a.m. Eastern, the stock was down between 4% and 5%.

Is this an irrational response to Check Point Software’s quarterly results? Maybe, or maybe not. Bear in mind, Check Point’s EPS of $1.64 barely exceeded the analyst consensus estimate of $1.62. It also demonstrated modest growth compared to the previous-year quarter’s $1.61.

Furthermore, Check Point’s $571 million in revenue only surpassed Wall Street’s forecast by 1.98%. Thus, the company’s beats may not have been good enough to impress today’s traders.

Sometimes, good enough just isn’t good enough. Perhaps traders in the 2020s have come to expect spectacular beats and double-digit percentage growth. As it turned out, Check Point Software didn’t deliver this today.

In time, today’s drop in CHKP stock may be viewed as a buying opportunity. Until then, though, it appears that the pessimists are in control, and it’s not so easy for tech firms to impress Wall Street nowadays.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.


Article printed from InvestorPlace Media, https://investorplace.com/2022/08/check-point-software-chkp-stock-slips-despite-earnings-beat/.

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