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Can Check Point (CHKP) Keep the Earnings Streak Alive?

Check Point Software Technologies Ltd. CHKP is set to report first-quarter 2016 results on Apr 20. Last quarter, the company posted a positive earnings surprise of 5.77%. Notably, Check Point has outperformed the Zacks Consensus Estimate in the trailing four quarters with an average positive earnings surprise of 4.61%.

Let's see how things are shaping up for this announcement.

Factors to Consider

Check Point concluded 2015 on a strong note with better-than-expected results for the fourth quarter. The company’s revenues and earnings also improved year over year.

The rapid adoption of Check Point’s data center appliances and the continuous enhancements in data center product lines are expected to provide adequate support to revenue growth. Additionally, the company’s continuous share buybacks bode well for investors.

However, competition from Cisco Systems Inc. CSCO, Juniper Networks Inc. and Fortinet Inc., an uncertain economic environment and currency headwinds remain concerns.

Earnings Whispers

Our proven model does not conclusively show that Check Point will beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 93 cents. Hence, the difference is 0.00%.

Zacks Rank: Check Point’s Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks to Consider

Here are a couple of companies which you may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Silicon Motion Technology Corp. SIMO, with an Earnings ESP of +7.27% and a Zacks Rank #1

MarketAxess Holdings Inc. MKTX, with an Earnings ESP of +1.27% and a Zacks Rank #2

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
CISCO SYSTEMS (CSCO): Free Stock Analysis Report
 
CHECK PT SOFTW (CHKP): Free Stock Analysis Report
 
SILICON MOTION (SIMO): Free Stock Analysis Report
 
MARKETAXESS HLD (MKTX): Free Stock Analysis Report
 
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