Internet security expert Check Point Software Technologies
For the fourth quarter, total revenues increased 9% to $156.1 million. Operating income improved by 17%, totaling $93.3 million. Net income was $89.2 million ($0.36 per diluted share) compared to $76.4 million ($0.30 per diluted share) in the year-ago period. That's 17% earnings growth year over year.
For all of 2005, revenues jumped 12% to $579.4 million. Operating income grew by 27%, coming in at $331.7 million. Net income was $319.7 million ($1.27 per diluted share) versus $248.4 million ($0.95 per diluted share) for 2004, an appreciation of 29%.
It looks like Check Point had a nice year. The financial tale is positive on the cash-flow side as well. For the quarter, net cash from operating activities increased 11% to $81.5 million; free cash flow also jumped 11% to $80.1 million. For the full year, net cash from operating activities increased 22% to $346.9 million; free cash flow again expanded by the same percentage, coming in at $342.1 million.
Looking at some key stats, we can see that Check Point does well on profit margins, return on assets, and return on equity. It has no long-term debt and a reasonable enterprise value-to-free cash flow ratio of 12. All in all, I'm impressed.
Yet the stock hasn't exactly rocketed after the fourth-quarter news. For one thing, guidance wasn't what the market wanted to hear. In addition, investors seeking growth might balk at paying up for a company whose near-term growth rate isn't necessarily spectacular -- Check Point isn't expected to fare much better than the overall market. Given its high P/E-to-growth ratio, that isn't necessarily enticing. A look at the long-term chart also shows Check Point's rocky past, which doesn't necessarily portend a benign future.
I like the Internet security sector, and I believe it will be an important industry going forward. But there's a lot of competition here, including RSA Security
Check out some related Takes:
Check into the Check Point Software Technologies discussion board.
More from The Motley Fool
Trick Your Brain Into Making You Richer
Our brains are often working against us, leading us to make dumb financial moves -- or to not do anything at all. Here's how to fight back.
3 Stocks That Turned $7,000 Into $28,000
FInd out how these stocks have crushed the market since 2013.
3 Tips for a Smooth Tax-Filing Process
Yes, it's that time again. Here's how to file your taxes while keeping your sanity intact.