Value Investing Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Keliven Wong who wrote (3958)	5/1/1998 12:51:00 AM
From: Wright Sullivan	Read Replies (1) of 78470

Re: CHKPF (Check Point Software Technologies Ltd.) You are correct, with a PSR of 10, CHKPF does flunk the margin of safety test. And MSFT may incorporate many of CHKPF's Firewall-1 features in NT-5.0 as they have gutted other companies' crown jewels in the past. But here is what I see: 1Q97 2Q97 3Q97 4Q97 1Q98 ttm 1997 1998 1999 Est Earnings: n/a 0.16 0.18 0.30 0.32 1.45 1.75 Act Earnings: 0.17 0.21 0.32 0.37 0.41 1.31 1.07 Chg from qtr: 24% 52% 16% 11% Chg from 1yr: 113% 117% 220% 147% 141% Revenues $mil: 13.7 17.3 22.4 29.6 30.9 100.2 83.0 Chg from qtr: 26% 29% 32% 4% Chg from 1yr: 183% 134% 179% 155% 125% Current Price: $29-3/8 Shares Outstanding: 35.6 million Market Cap: $1.046 billion Price/Sales (ttm): 10.44 Price/Earnings (ttm): 22.42 Price/Earnings (1997): 27.45 Price/Earnings (1998 est): 20.46 Price/Earnings (1999 est): 16.79 Pro: - P/E extremely low compared to est. growth of 40% - Earnings have consistently outperformed estimates - CHKPF has approximately 40% of firewall market share (a "gorilla") - Profit margins excellent and increasing - Focus expanded beyond firewalls to virtual private networks (VPN) - Key player in emerging business-to-business communications/commerce - Explosive internet growth requires security products at ISP's, etc. - 50% of CHKPF sales are on non-WinNT (i.e. non-MSFT) systems. Con: - Slow revenue growth in most recent quarter of 4% over previous qtr. - No margin of safety with PSR of 10 - Firewalls may be in danger of becoming a commodity product - Titans are interested in CHKPF's market (CSCO, MSFT, etc.) - Many other security companies trying to build a complete VPN or security solution (AXNT, Net. Assoc., etc.) Conclusion: While there is substantial risk with little or no downside protection (hey, it's a software company), this stock appears to be significantly undervalued at $29-3/8. Any comments?

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next