The cybersecurity market is booming as businesses face escalating threats like ransomware and email compromises. These attacks not only incur immediate costs but also cause lasting damage, such as business disruptions and intellectual property theft. To combat these risks, companies are prioritizing robust cybersecurity measures, driving a surge in industry investments.
Therefore, investors could benefit from considering leading cybersecurity stocks like Okta, Inc. (OKTA), Fortinet, Inc. (FTNT), and Check Point Software Technologies Ltd. (CHKP), which offer compelling options.
According to Gartner, global spending on information security is set to hit $212 billion by 2025, a 15.1% rise from 2024, driven by regulatory reforms like CIRCIA and the need for enhanced compliance. Investments focus on critical infrastructure, improved security postures, and addressing emerging threats, fostering trust and further boosting the cybersecurity market.
Furthermore, using visuals like charts and infographics enhances cybersecurity data accessibility, driving better business decisions. Cybersecurity leaders are also simplifying risk communication for stakeholders, ensuring stronger support for investments. As a result, the global cybersecurity market to grow from $193.73 billion in 2024 to $562.72 billion by 2032, at a CAGR of 14.3%.
Let’s now dive into the fundamentals of the three Software - Security stocks highlighted above, starting with number three.
Stock #3: Okta, Inc. (OKTA)
OKTA operates as an identity partner internationally. The company offers a suite of products and services designed to manage and secure identities, including Single Sign-On, Adaptive Multi-Factor Authentication, API Access Management, Access Gateway, and Okta Device Access.
On October 16, 2024, OKTA launched new Workforce Identity Cloud features to tackle security challenges like unmanaged SaaS accounts, governance risks, and social engineering attacks. These include Secure SaaS Service Accounts, Governance Analyzer with Okta AI, and improved identity verification, enhancing both security and user experience.
In terms of the trailing-12-month levered FCF margin, OKTA’s 28.20% is 151.4% higher than the 11.22% industry average. Likewise, its 76.12% trailing-12-month gross profit margin is 51% higher than the 50.41% industry average.
OKTA’s total revenue for the fiscal third quarter ended October 31, 2024, increased 13.9% year-over-year to $665 million. Its non-GAAP operating income was $138 million, up 62.4% year-over-year. Additionally, its non-GAAP net income and net income per share were $121 million and $0.67, respectively, reflecting increases of 53.2% and 52.3% compared to the prior-year quarter.
Street expects OKTA’s EPS and revenue for the quarter ending January 31, 2025, to increase 16.9% and 10.6% year-over-year to $0.74 and $669.10 million, respectively. It surpassed the consensus revenue estimates in each of the trailing four quarters. Over the past month, the stock has gained 11.7% to close the last trading session at $81.41.
OKTA’s POWR Ratings reflect strong prospects. It has an overall rating of B, which translates to a Buy in our proprietary system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Growth and Sentiment. Within the A-rated Software - Security industry, it is ranked #8 out of 20 stocks. To access additional grades for OKTA’s Value, Momentum, Stability, and Quality ratings, click here.
Stock #2: Fortinet, Inc. (FTNT)
FTNT provides cybersecurity and converged networking and security solutions worldwide. It offers secure networking solutions focused on the integration of networking and security; network firewall solutions, including FortiGate data center, hyperscale, and distributed firewalls, as well as encrypted applications; wireless LAN solutions; and secure connectivity solutions.
On December 3, 2024, FTNT launched FortiAppSec Cloud, a unified platform for web application security and performance. It combines tools for API security, bot defense, and server load balancing, simplifying the protection and management of hybrid and multi-cloud environments.
In terms of the trailing-12-month Return on Common Equity margin, FTNT’s 311.53% is significantly higher than the 4.29% industry average. Similarly, its 28.86% trailing-12-month levered FCF margin is 157.3% higher than the 11.22% industry average. Additionally, its 26.79% trailing-12-month net income margin is 632% higher than the 3.66% industry average.
For the third quarter ended September 30, 2024, FTNT's total revenue increased 13% year-over-year to $1.51 billion. Its non-GAAP operating income rose 46.7% from the year-ago value to $544.70 million. During the same period, the company’s non-GAAP net income and non-GAAP net income per share grew 50.7% and 53.7%, respectively, to $487.60 million and $0.63.
Analysts expect FTNT’s EPS and revenue for the quarter ending December 31, 2024, to increase 19.1% and 12.7% year-over-year to $0.61 and $1.60 billion, respectively. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 66.4% to close the last trading session at $93.36.
FTNT’s positive outlook is reflected in its POWR Ratings. It has an overall rating of B, equating to a Buy in our proprietary rating system.
It has an A grade for Quality and a B for Sentiment. It is ranked #7 in the same industry. Beyond what we stated above, we also have given FTNT grades for Growth, Value, Momentum, and Security. Get all the FTNT ratings here.
Stock #1: Check Point Software Technologies Ltd. (CHKP)
CHKP develops, markets, and supports a range of products and services for IT security worldwide. The company offers a multilevel security architecture, as well as solutions for cloud, network, mobile devices, endpoints, information, and IoT.
On November 20, 2024, CHKP launched Quantum Firewall Software R82, using AI-powered engines to block 99.8% of zero-day threats. The update improves threat prevention, DevOps agility, and simplicity, with features like post-quantum cryptography and easy scalability for enterprise networks.
On October 1, 2024, CHKP completed its acquisition of Cyberint Technologies. This integration strengthens the Infinity Platform with advanced external risk management, providing real-time threat intelligence, AI-driven risk detection, and proactive protection for businesses against cyber threats.
In terms of the trailing-12-month net income margin, CHKP’s 33.17% is 806.3% higher than the 3.66% industry average. Its 15.19% trailing-12-month Return on Total Assets is 703.9% higher than the 1.89% industry average. Also, its 34.60% trailing-12-month EBIT margin is 540.3% higher than the industry average of 5.40%.
During the third quarter ended September 30, 2024, CHKP’s total revenues increased 6.5% year-over-year to $635.10 million. The company’s non-GAAP operating income grew 1.9% from the year-ago value to $274 million. Similarly, CHKP’s non-GAAP net income and EPS were $255.40 million and $2.25, reflecting increases of 5.4% and 8.7%, respectively, from the prior year’s quarter.
For the quarter ending December 31, 2024, CHKP’s EPS is expected to increase 3.2% year-over-year to $2.65. Its revenue for the same quarter is expected to rise 5.3% year-over-year to $698.55 million. CHKP surpassed the Street EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 21.5% to close the last trading session at $181.09.
CHKP’s positive outlook is reflected in its POWR Ratings. It has an overall rating of B, equating to a Buy in our proprietary rating system.
It is ranked #6 in the Software – Security industry. It has an A grade for Quality. To see CHKP’s Growth, Value, Momentum, Stability, and Sentiment ratings, click here.
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FTNT shares were trading at $95.10 per share on Thursday afternoon, up $1.74 (+1.86%). Year-to-date, FTNT has gained 62.48%, versus a 25.09% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
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