Cybersecurity is emerging as one of businesses’ and governments’ biggest priorities. The U.S. government is still dealing with a months-long security breach first identified in December. Because sensitive information from more than six government agencies and several Fortune 500 companies have been compromised, the clamor for effective cybersecurity software has gotten louder. International Data Company (IDC) expects the cybersecurity industry to grow at a CAGR of 8.1% over the next four years to hit $174.70 billion in revenue by 2024.
Remote working trends have also contributed to the rising demand for cybersecurity. Companies are actively investing in state-of-the-art software and technology to protect their proprietary information from being stolen. As most companies have adopted hybrid working models, a recent survey by PwC revealed that 96% of executives have upgraded their cybersecurity strategy in 2020.
As the remote lifestyle is expected to remain post COVID-19 pandemic, we think companies such as McAfee Corp. (MCFE) and Check Point Software Technologies Ltd. (CHKP) are well-positioned to hit new highs this year and beyond.
Check Point Software Technologies Ltd. (CHKP)
Headquartered in Israel, CHKP offers multiple data and network, endpoint and management security solutions, thereby providing all-inclusive IT security coverage. Its solutions are designed for commercial businesses and small-scale enterprises, as well as to meet customized consumer requirements. The company’s cybersecurity architecture is designed to combat 5th and 6th generation cyberattacks.
This month, CHKP released an Economic Impact Study conducted by Forrester Consulting, which reported that CHKP delivered a 169% return on investment over the past three years. In addition, CHKP’s network security solution repaid its initial investment within the first three months of operations.
The company’s financial strength is reflected in its performance during the fourth quarter ended December 31, 2020 results. CHKP’s total revenues increased 4% year-over-year to $564 million over this period. Its non-GAAP operating income rose slightly from the year-ago value to $285 million, while its EPS rose 6% from the same period last year to $1.95.
A consensus EPS estimate of $1.49 for the fiscal first quarter ending March 31, 2021 represents a 4.9% improvement year-over-year. Furthermore, CHKP surpassed the Street’s EPS estimates in each of the trailing four quarters, which is impressive. A consensus revenue estimate of $502.42 million for the current quarter represents a 3.3% rise from the same period last year.
CHKP has gained nearly 50% since hitting its 52-week low of $80.06 in March. The stock hit its 52-week high of $139.26 on December 29.
CHKP has an overall rating of B, which equates to Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
It has an A grade for Quality, and a B grade for Value and Momentum. In the 25-stock Software – Security industry, CHKP is ranked #9.
Click here to check out additional POWR Ratings for Stability, Growth and Sentiment here.
McAfee Corp. (MCFE)
MCFE is a diversified cybersecurity company operating through two segments – Consumer and Enterprise. It provides integrated computer solutions and security solutions under Total Protection and LiveSafe brands. Its anti-malware software and security technologies are ideal for home platform products. The company also offers online privacy services through multiple VPN software platforms. MCFE made its public debut on October 22 last year at an opening price of $20. The stock has gained 10.7% since then. MCFE hit its all-time high of $22.14 on January 24.
On February 4, MCFE partnered with LG to offer McAfee security on LG computers in Korea for a trial period of 30 days for free. The company received several cybersecurity awards in December, reflecting its impressive growth since its inception in 2019. McAfee MVISION Unified Cloud Edge received the 2020 Stratus Award in the best cloud security services category from The Business Intelligence Group. And on December 7, market intelligence organization CyberSecurity Breakthrough named McAfee MVISION Insights as the Endpoint Security Solution of the year.
MCFE’s total revenues have increased 10% year-over-year to $728 million in the third quarter ended September 30, 2020. This can be attributed to a 23% rise in revenues from its consumer segment. Its operating income has risen 142% from the same period last year to $128 million, while its adjusted EBITDA increased 26% from the year-ago value to $265 million.
MCFE’s EPS is expected to rise 5.2% in fiscal 2020, and at a rate of 20% per annum over the next five years. A consensus revenue estimate of $2.99 billion for the current year represents a 4.1% improvement year-over-year.
It’s no surprise that MCFE has an overall rating of A, which equates to Strong Buy in our POWR Ratings system. It has a B grade for Value, Growth, Sentiment and Momentum.
MCFE is currently ranked #1 in the B-rated Software – Security industry. In addition to the grades I’ve highlighted, you can check out additional ratings for Quality and Stability here.
The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
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CHKP shares fell $0.22 (-0.18%) in after-hours trading Friday. Year-to-date, CHKP has declined -9.17%, versus a 5.02% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditi Ganguly
Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...
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