Without More Revenue Growth, Check Point's Valuation Is Almost Beside The Point

Normally, investors would be happy with a company that generated more than twice as much operating income growth as revenue growth and actually reduced operating expenses. But then, software isn't a normal sector and Check Point Software Technologies (CHKP) isn't a normal company. In a sector where revenue growth is a major driver, Check Point's focus on expense discipline and organic/internal development hasn't been generating much revenue growth and hasn't helped the share price much next to Fortinet (FTNT), Palo Alto (PANW), or the Nasdaq.

One of my biggest concerns about Check Point is that the company will keep itself lashed to the mast of a ship that's not going anywhere (traditional firewall-type security) instead of taking more aggressive steps toward growth in the evolving enterprise security world. I don't doubt that Check Point has the resources to change its trajectory, but I'm not sure it has the will. With that, although the share price/value proposition is interesting, I'm nervous about buying into a lower-growth software story, given how challenging and frustrating they can be.

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Without More Revenue Growth, Check Point's Valuation Is Almost Beside The Point