Check Point Software Technologies (NASDAQ:CHKP) needed to step on the gas in 2021 to put behind years of underperformance on the stock market, but the cybersecurity specialist's latest results indicate that it may take some time before that happens.

Though Check Point beat Wall Street's estimates for the fourth quarter of 2020, its guidance for the ongoing quarter and the full year was not up to the mark. Given that the company has been struggling to achieve eye-popping top-line growth as compared to its more illustrious peers in the competitive cybersecurity market, it wasn't surprising to see investors dump the stock after its quarterly report.

CHKP Chart

CHKP data by YCharts

Does this mean investors should shun Check Point shares, or will it be a good idea to keep an eye on the stock in the hope of a turnaround down the road? Let's find out.

The problem with Check Point Software

Check Point Software's 2020 revenue increased 4% year over year to $2.06 billion. The company also reported an 11% increase in non-GAAP earnings to $6.78 per share for the full year. Check Point expects revenue between $2.08 billion and $2.18 billion this year, as management pointed out on the latest earnings call.

The midpoint of that range indicates a 3.4% increase in the company's annual revenue this year. This revenue deceleration is not the only thing that has put investors off. Check Point has guided for non-GAAP earnings between $6.45 and $6.85 per share for the full year. The midpoint of that range indicates that the company's bottom line could contract this year.

Check Point's earnings got a shot in the arm last year as offices remained closed on account of coronavirus-related shutdowns. More specifically, earnings were positively affected to the tune of $0.25 per share as "the level of expenses in 2020 was extraordinarily low as a result of the cancellation of almost all physical activity," explained CEO Gil Shwed on the earnings call.

Cybersecurity abstract shield.

Image source: Getty Images.

The silver lining is that Check Point's bottom line is expected to improve this year if we exclude the coronavirus-related gain from 2020's earnings. At the same time, Shwed said on the earnings call that the company will ramp up investments in sales and research and development (R&D) this year as compared to 2020 levels.

Such a move could give Check Point a much-needed boost, as the company has historically lagged behind its cybersecurity rivals as far as spending on R&D and sales and marketing is concerned.

CHKP Research and Development Expense (% of Annual Revenues) Chart

CHKP Research and Development Expense (% of Annual Revenues) data by YCharts

This explains why Check Point's top-line growth hasn't been as spectacular as its rivals over the years, who have been aggressively looking to land more business with an aggressive customer acquisition strategy. It would be good to see Check Point adopt such a strategy instead of spending a large chunk of its money on repurchasing shares to prop up earnings. The company repurchased shares worth $1.3 billion in 2020, which substantially exceeded its outlay of $822.7 million on R&D and selling and marketing.

Are there any more silver linings?

Check Point Software's cloud business clocked double-digit percentage growth in 2020. Check Point needs to get its act together in this space as the global cloud security market is expected to clock a compound annual growth rate (CAGR) of 13.9% through 2024, as per a third-party estimate. What's more, the rapid growth of the cloud security market has played a key role in the impressive performance of its rivals.

As such, strong growth in the cloud security market could help Check Point Software switch into a higher gear. But that transformation may take some time to happen, as the cloud business accounted for less than 10% of the company's total revenue in the second quarter of 2020.

What should investors do?

There are high growth stocks on offer in the cybersecurity space, but patient investors looking for a mix of value and stability in this market may keep their eyes on Check Point. That's because the company has a debt-free balance sheet and is sitting on a cash balance of $4 billion (including marketable securities and short-term deposits), which it can use to step up its growth by way of acquisitions or increased marketing outlay.

Finally, Check Point trades at less than 20 times trailing earnings. So, investors willing to wait for the company to step up its game can get in at a reasonable multiple and sit tight for the long haul, as Check Point's switch from a low-growth company to a high-growth one is going to take time.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.