Critical Analysis: Check Point Software Technologies (NASDAQ:CHKP) and Zscaler (NASDAQ:ZS)

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

Analyst Recommendations

This is a summary of recent recommendations for Zscaler and Check Point Software Technologies, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Zscaler	0	8	28	1	2.81
Check Point Software Technologies	0	16	11	1	2.46

Zscaler presently has a consensus target price of $294.03, suggesting a potential downside of 4.73%. Check Point Software Technologies has a consensus target price of $232.44, suggesting a potential upside of 5.35%. Given Check Point Software Technologies’ higher probable upside, analysts plainly believe Check Point Software Technologies is more favorable than Zscaler.

Insider and Institutional Ownership

46.5% of Zscaler shares are held by institutional investors. Comparatively, 98.5% of Check Point Software Technologies shares are held by institutional investors. 18.1% of Zscaler shares are held by company insiders. Comparatively, 29.0% of Check Point Software Technologies shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Risk and Volatility

Zscaler has a beta of 1.09, indicating that its stock price is 9% more volatile than the S&P 500. Comparatively, Check Point Software Technologies has a beta of 0.66, indicating that its stock price is 34% less volatile than the S&P 500.

Earnings & Valuation

This table compares Zscaler and Check Point Software Technologies”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Zscaler	$2.17 billion	22.17	-$57.71 million	($0.26)	-1,187.02
Check Point Software Technologies	$2.60 billion	9.32	$845.70 million	$7.58	29.11

Check Point Software Technologies has higher revenue and earnings than Zscaler. Zscaler 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Zscaler	-1.52%	-0.59%	-0.18%
Check Point Software Technologies	32.75%	32.88%	16.43%

Summary

Check Point Software Technologies beats Zscaler on 10 of the 14 factors compared between the two stocks.

About Zscaler

Zscaler, Inc. operates as a cloud security company worldwide. The company offers Zscaler Internet Access solution that provides users, workloads, IoT, and OT devices secure access to externally managed applications, including software-as-a-service (SaaS) applications and internet destinations; and Zscaler Private Access solution, which is designed to provide access to managed applications hosted internally in data centers, and private or public clouds. It also provides Zscaler Digital Experience that measures end-to-end user experience across business applications, as well as provides an easy-to-understand digital experience score for each user, application, and location within an enterprise. In addition, the company offers Posture Control solutions comprising Cloud Security Posture Management that identifies and remediates application misconfigurations in SaaS, infrastructure as a service, and PaaS to reduce risk and ensure compliance with industry and organizational benchmarks; Cloud Infrastructure Entitlement Management that detects and remediates excessive or unused cloud permissions and enforces least privileged access without disrupting productivity; Infrastructure as Code (IaC), which analyzes IaC templates to identify misconfigurations and other security issues prior to deployment to cloud infrastructure; and Vulnerability Scanning and Data Loss Prevention solutions. Its platform modules include Zscaler Central Authority, Zscaler Enforcement Node, and Zscaler Log Servers. The company serves customers in airlines and transportation, conglomerates, consumer goods and retail, financial services, healthcare, manufacturing, media and communications, public sector and education, technology, and telecommunications services industries. The company was formerly known as SafeChannel, Inc., and changed its name to Zscaler, Inc. in August 2008. Zscaler, Inc. was incorporated in 2007 and is headquartered in San Jose, California.

About Check Point Software Technologies

Check Point Software Technologies Ltd. develops, markets, and supports a range of products and services for IT security worldwide. The company offers a multilevel security architecture, cloud, network, mobile devices, endpoints information, and IOT solutions. It provides Check Point Infinity Architecture, a cyber security architecture that protects against fifth generation cyber-attacks across various networks, endpoint, cloud, workloads, Internet of Things, and mobile. In addition, the company offers security gateways and software platforms that support small and medium sized business. Further, it provides cloud network security, cloud native application protection, security and posture management, cloud identity and entitlement, cloud workload protection, cloud detection and response, and cloud web application protection for web applications and APIs; and Check Point Harmony that delivers endpoint and secure connectivity for remote user access. Additionally, the company offers technical customer support programs and plans; professional services in implementing, upgrading, and optimizing Check Point products comprising design planning and security implementation; and certification and educational training services on Check Point products. It sells its products through distributors, resellers, system integrators, original equipment manufacturers, and managed security service providers. Check Point Software Technologies Ltd. was incorporated in 1993 and is headquartered in Tel Aviv, Israel.