Analyzing Check Point Software Technologies (CHKP) and Square (NYSE:SQ)

Check Point Software Technologies (NASDAQ: CHKP) and Square (NYSE:SQ) are both large-cap computer and technology companies, but which is the superior stock? We will compare the two businesses based on the strength of their risk, institutional ownership, earnings, dividends, analyst recommendations, valuation and profitability.

Risk & Volatility

Check Point Software Technologies has a beta of 0.72, indicating that its stock price is 28% less volatile than the S&P 500. Comparatively, Square has a beta of 4.78, indicating that its stock price is 378% more volatile than the S&P 500.

Insider and Institutional Ownership

68.0% of Check Point Software Technologies shares are held by institutional investors. Comparatively, 53.9% of Square shares are held by institutional investors. 29.0% of Check Point Software Technologies shares are held by company insiders. Comparatively, 32.7% of Square shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Check Point Software Technologies and Square’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Check Point Software Technologies 42.17% 22.02% 14.91%
Square -4.13% -12.41% -5.36%

Analyst Ratings

This is a summary of current ratings and price targets for Check Point Software Technologies and Square, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Check Point Software Technologies 0 14 15 0 2.52
Square 0 11 20 0 2.65

Check Point Software Technologies presently has a consensus price target of $112.09, indicating a potential downside of 3.00%. Square has a consensus price target of $25.95, indicating a potential downside of 21.13%. Given Check Point Software Technologies’ higher probable upside, analysts plainly believe Check Point Software Technologies is more favorable than Square.

Earnings & Valuation

This table compares Check Point Software Technologies and Square’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Check Point Software Technologies $1.81 billion 10.43 $893.47 million $4.50 25.68
Square $1.90 billion 6.64 -$41.20 million ($0.21) -156.66

Check Point Software Technologies has higher revenue, but lower earnings than Square. Square is trading at a lower price-to-earnings ratio than Check Point Software Technologies, indicating that it is currently the more affordable of the two stocks.

Summary

Check Point Software Technologies beats Square on 8 of the 13 factors compared between the two stocks.

Check Point Software Technologies Company Profile

Check Point Software Technologies Ltd. (Check point) develops, markets and supports a range of products and services for information technology (IT) security. The Company’s products and services are sold to enterprises, service providers, small and medium sized businesses and consumers. It offers enterprises a platform to deploy independent, modular and interoperable security applications (Software Blades), such as firewall, virtual private network (VPN), intrusion prevention system (IPS), Application Control, Anti-Bot, antivirus, data loss prevention (DLP), policy management, event analysis or multi-domain management. The Company offers Software Blades grouped into functional packages to address specific security issues. It has product offerings under these packages, which include Next Generation Firewall, Next Generation Threat Prevention, Next Generation Secure Web Gateway and Next Generation Data Protection.

Square Company Profile

Square, Inc. (Square) is a commerce ecosystem. The Company enables its sellers start, run and grow their businesses. It combines software with hardware to enable sellers to turn mobile devices and computing devices into payments and point-of-sale solutions. Once a seller downloads the Square Point of Sale mobile application, they can take their first payment. With its offering, a seller can accept payments in person via magnetic stripe (a swipe), Europay, MasterCard, and Visa (EMV) (a dip), or Near Field Communication (NFC) (a tap); or online via Square Invoices, Square Virtual Terminal, or the seller’s Website. Once on its system, sellers gain access to technology and features, such as reporting and analytics, next-day settlements, digital receipts, payment dispute management and chargeback protection, and Payment Card Industry (PCI) compliance. On the consumer (buyer) side, Square Cash offers individuals access to a way to send and receive money.

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