Valens Equities Weekly Insights and Inflections for September 7, 2016
Each week, the Valens Securities team highlights our most interesting insights from across our tools and our analysis, including individual company, industry, and macro insights.
Expectations for CHKP to see a reversal in positive ROA’ trends are unwarranted, as both management and analysts are gaining confidence in the firm’s outlook
CHKP is trading at a 14.9x V/E’, which is near historical averages. At these levels, the market is pricing in expectations for a declining ROA’, from 184% in 2015 to 140% in 2020, accompanied by 1% Asset’ shrinkage. Analysts have similar expectations relative to the market, expecting ROA’ to decline to 133% by 2017, accompanied by 18% Asset’ growth. However, Valens’ qualitative analysis highlights that management is confident about their transition to a new revenue model, as well as about the sustainability of growth in their businesses. Furthermore, though analyst estimates are muted, they have grown over the past year, indicating that they are growing more confident about the firm’s outlook. Given growing management and analyst confidence surrounding the firm’s fundamentals, current market expectations are too bearish and equity upside for CHKP may be warranted.
Market Insights
Most Compelling Long Ideas
FB, ZG, DLTR, DHI, GOOGL
Most Compelling ECF™ Inflections
CRUS, ABC, AYI, WCN, MA
Company Specific Highlights & Insights:
SEHK:700, AGN, AMT, APC, BABA, CAT, CERN, COG, COP, DIS, F, FOXA, MTD, NATI, NEE, PXD, RIG, ASX:RIO, SABR, DB:SIE, TEVA, VAR,VRX, WU
If you are interested in seeing any of the highlighted analyses, please contact the Valens team at valens@valens-securities.com
