Amid an accelerated pace of global, digital transformation, the number and severity of cyber frauds have risen significantly over the past year, resulting in significant losses for corporations worldwide. Furthermore, last month, the ransomware attack on nearly 200 companies in the U.S. pushed the government to strengthen its cybersecurity strategy. Consequently, the government has allocated approximately $2 billion for cybersecurity purposes in the Senate’s recently passed $1 trillion bipartisan infrastructure bill.
With cyberattacks increasing significantly due to remote working trends, organizations worldwide are boosting their investment in advanced information security solutions. The global cybersecurity market is expected to reach $345.4 billion by 2026, registering a 9.7% CAGR .
Checkpoint Software Technologies Limited (CHKP), McAfee Corp. (MCFE), and Radware Ltd. (RDWR) are well-established companies in the cybersecurity space. They are expected to witness steady growth in the foreseeable future. So, we believe they could be great picks now because they are currently trading below their 52-weeks highs.
Click here to checkout our Cybersecurity Industry Report for 2021
Checkpoint Software Technologies Limited (CHKP)
CHKP creates, markets, and supports a wide range of IT security products and services globally. The company provides solutions for network security, endpoint security, data security, and management. It offers its goods and services to corporations, service providers, small- and medium-sized organizations, and consumers. CHKP is based in San Carlos, Calif.
CHKP's board of directors this month approved a $2 billion increase in its ongoing share repurchase program. The company will continue to repurchase its shares, up to $325 million each quarter, under the expanded share repurchase program. This decision reflects the company’s robust financial health.
During the second quarter, ended June 30, 2021, CHKP’s revenue increased 4.1% year-over-year to $526.1 million. Its non-GAAP operating income increased marginally year-over-year to $257.1 million, while its non-GAAP net income came in at $217 million. The company’s non-GAAP EPS increased 2% year-over-year to $1.61 over this period.
A $7.21 consensus EPS estimate for the current year represents a 6.5% improvement year-over-year. The $2.14 billion consensus revenue estimate for the current year represents a 3.5% increase from the same period last year. The stock has gained 5% over the past three months to close yesterday’s trading session at $123.73. However, it is currently trading 11.2% below its 52-week high of $139.26, which it hit on December 29, 2020.
CHKP's POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
CHKP is also rated an A grade for Quality, and a B for Value. Within the Software - Security industry, it is ranked #5 of 26 stocks.
To see additional POWR Ratings for Growth, Sentiment, Momentum, and Stability for CHKP, click here.
McAfee Corp. (MCFE)
MCFE, which is based in Santa Clara, Calif., offers various integrated security, privacy, and trust solutions to individuals, small- and medium-sized organizations, large enterprises, and governments in the United States and internationally. Consumer and Enterprise are the company’s two operational segments. In addition, it also offers device security, privacy, and safe Wi-Fi, online protection, and identity protection services, and MVISION Device, MVISION Cloud, and MVISION security services.
This month, MCFE and Visa, Inc. (V) made a new agreement that will allow Visa’s financial institution partners in North America and EMEA to provide award-winning internet protection to Visa Business cardholders. This collaboration will enable Visa Business cardholders to save up to 40% on a two-year McAfee subscription that protects sensitive data via email, provides browser and firewall security, provides mobile VPN, and protects devices from malware and the newest online threats.
Also, last month, MCFE was named a Globee Award winner in two corporate security categories: Gold in Endpoint Security with MVISION XDR and Silver for "Hot Technology of the Year'' with its Remote Browser Isolation features in McAfee Unified Cloud Edge. The Annual 2021 IT World Awards are renowned, worldwide awards that recognize information technology and cybersecurity vendors and could help MCFE build a superior brand image in the industry.
MCFE's revenue increased 21.9% year-over-year to $467 million in the second quarter, ended June 26, 2021. Its operating income surged 100% year-over-year to $156 million. The company's net income came in at $36 million, while its EPS came in at $0.21 over this period.
The company’s EPS is expected to grow 35% year-over-year to $1.08 in its fiscal year 2022. Analysts expect MCFE’s revenue to increase 11.3% year-over-year to $1.99 billion next year. The stock has soared 58.1% year-to-date to close yesterday’s trading session at $26.39. It is currently trading 19.6% below its 52-week high of $32.83, which it hit on August 06, 2021.
MCFE’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. MCFE also has an A grade for Sentiment, and a B for Value. In addition, the stock is ranked #2 of 26 stocks in the Software - Security Industry.
Beyond the POWR Ratings grades I have just highlighted, you can see the MCFE ratings for Growth, Stability, Quality, and Momentum.
Radware Ltd. (RDWR)
RDWR creates, produces, and distributes cybersecurity and application delivery systems globally for physical, virtual, cloud, and software-defined data centers. In addition, it also offers a Cloud DDoS Protection Service, which provides customers with a variety of enterprise-grade DDoS protection services in the cloud and technical support, professional, managed, and training and certification services. RDWR is headquartered in Tel Aviv, Israel.
This month, RDWR announced that one of America's Fortune 100 manufacturing companies had chosen its hybrid cloud security strategy. This world-leading company chose RDWR cloud application security to secure thousands of online apps housed on Amazon Web Services (AWS), Microsoft Azure, and a private cloud.
Also this month, RDWR announced an expanded partnership with INAP, an RDWR premium partner and a global provider of performance-driven, secure hybrid infrastructure solutions. Through this collaboration, INAP intends to deploy RDWR's Cloud WAF and DDoS Protection Services to a wide range of industries, such as Ad tech, healthcare, healthcare technology, entertainment and gaming, financial services, SaaS, ISF, and many more.
In the second quarter, ended June 30, 2021, RDWR’s revenue increased 19.2% year-over-year to $66.67 million. Its operating income came in at $4.90 million, compared to a $266 million operating loss in the prior-year quarter. The company's net income increased 573.4% from its year-ago value to $4.53 million over this period. Its EPS grew 900% from the prior-year quarter to $0.10.
A $0.72 consensus EPS estimate for the current year represents a 12.5% increase year-over-year. The $272.93 million consensus revenue estimate for the current year represents a 9.2% increase from the same period last year. The stock has surged 24.8% over the past year to close yesterday’s trading session at $32.80. It is currently trading 0.4% below its 52-week high of $32.92, which it hit on August 13, 2021.
RDWR's POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system. In addition, RDWR has received an A grade for Quality, and a B for Growth and Stability. Within the Software - Security industry, it is ranked #1 of 26 stocks.
Click here to see additional POWR Ratings for Value, Momentum, and Sentiment for RDWR.
Click here to checkout our Cybersecurity Industry Report for 2021
CHKP shares were trading at $123.22 per share on Monday morning, down $0.51 (-0.41%). Year-to-date, CHKP has declined -7.29%, versus a 19.61% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.
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