Check Point Software Technologies Ltd. (CHKP): 6 Reasons to Buy This Low-Rated Tech Company

Fourth, potential investors always need to remember that Check Point uses bundling as part of its sales strategy. In other words, it tends to try and accelerate software sales by bundling them with hardware sales. As the company is increasing the amount of software solutions that work on its hardware, it is reasonable to expect that hardware sales will fall as a percentage of the total bundled amount. Don’t panic too much over falling hardware sales.

Fifth, the guidance looks conservative. Based on company accounts and the guidance given on the conference call, I have graphed revenues and implied assumptions for revenue growth in the next two quarters. It doesn’t look like an aggressive forecast, and Check Point has a history of being conservative with guidance.

Finally, Cisco Systems, Inc. (NASDAQ:CSCO) recently announced its plan to acquire IT security company Sourcefire in a $2.7 billion deal. Cisco’s security revenues fell 5.2% at its last set of results, and this deal is clearly an attempt to regain positioning. It’s exactly the kind of deal that Cisco Systems, Inc. (NASDAQ:CSCO) needs to do in order to counteract slowing growth in its core switching and routing divisions. The immediate takeover speculation will focus on fast growing companies like Fortinet and Palo Alto Networks Inc (NYSE:PANW). However, this sort of deal usually helps to guide investors a sector, and Check Point can expect to benefit too.

The bottom line

In conclusion, while the recent results didn’t have many positive things to say about the IT spending environment, Check Point did report some underlying positives. Moreover, the valuation of the stock is attractive, and it’s a stock well worth considering for value investors looking for some tech exposure.

Lee Samaha has no position in any stocks mentioned. The Motley Fool recommends Check Point Software Technologies and Cisco Systems. The Motley Fool owns shares of Check Point Software Technologies.

The article 6 Reasons to Buy This Low-Rated Tech Company originally appeared on Fool.com and is written by Lee Samaha.

Lee is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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