As digital transformation accelerates, cybersecurity firms are tackling challenges such as AI-driven threats and post-quantum risks, solidifying their critical role in today’s tech-driven world. This growing importance fuels investor confidence in the sector’s potential.
Against this dynamic backdrop, cybersecurity leaders like CyberArk Software Ltd. (CYBR), Fortinet, Inc. (FTNT), and Check Point Software Technologies Ltd. (CHKP), emerge as compelling investment options.
The growing demand for cybersecurity arises from the increasing prevalence of identity-based attacks, driving organizations to adopt zero-trust security models, risk-based authentication, and continuous verification to protect sensitive assets. According to Statista, the global cybersecurity market is projected to reach an impressive $203 billion by 2025, highlighting the sector’s critical role.
Notably, companies are proactively developing quantum-resilient cryptographic strategies to address emerging risks, ensuring their solutions remain secure and future-ready. By embedding security into organizational frameworks, cybersecurity firms are fostering innovation, enhancing resilience, and delivering long-term risk mitigation while aligning their strategies with business objectives.
As a result, global information security spending is expected to reach $212 billion by 2025, up 15.1% from 2024, driven by regulatory reforms and compliance needs. This growth underscores the critical role of cybersecurity firms and enhances investor confidence in the sector’s future potential. Let’s now dive into the fundamentals of the three Software - Security stocks highlighted above, starting with number three.
Stock #3: CyberArk Software Ltd. (CYBR)
Headquartered in Petah Tikva, Israel, CYBR and its subsidiaries develop, market, and sell software-based identity security solutions and services internationally. Its solutions include Privileged Access Manager, Vendor Privileged Access Manager, Dynamic Privileged Access, Endpoint Privilege Manager, and Secure Desktop.
On January 15, 2025, CYBR announced an integration between its Privileged Access Manager and Microsoft Defender for Identity, providing organizations with enhanced identity security, streamlined privileged access workflows, and improved threat response capabilities.
This integration helps Security Operations teams detect, investigate, and mitigate advanced identity-based threats across hybrid and multi-cloud environments.
In terms of the trailing-12-month gross profit margin, CYBR’s 81.07% is 61.7% higher than the 50.14% industry average.
CYBR’s total revenue for the fiscal third quarter ended September 30, 2024, increased 25.6% year-over-year to $240.10 million. Its non-GAAP gross profit was $200.33 million, up 26.7% year-over-year. Additionally, its non-GAAP net income and net income per share were $45.14 million and $0.94, respectively, reflecting 130.2% and 123.8% increases compared to the prior-year quarter.
Street expects CYBR’s revenue for the quarter ended December 31, 2024, to increase 35.1% year-over-year to $301.47 million. Its EPS for the quarter ending March 31, 2025, is expected to grow 2.6% year-over-year to $0.77. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 55.1% to close the last trading session at $359.46.
CYBR’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 a B for Sentiment and Quality. Within the B-rated Software - Security industry, CYBR is ranked #10 out of 20 stocks. To access additional grades for CYBR’s Value, Momentum, and Stability ratings, click here.
Stock #2: 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 introduced Quantum Firewall Software R82, powered by AI to block 99.8% of zero-day threats. It enhances threat prevention, simplifies DevOps, and offers features like post-quantum cryptography and scalable enterprise network solutions.
In terms of the trailing-12-month net income margin, CHKP’s 33.17% is 759.8% higher than the 3.86% industry average. Its 15.19% trailing-12-month Return on Total Assets is 648.7% higher than the 2.03% industry average. Also, its 34.60% trailing-12-month EBIT margin is 530.5% higher than the industry average of 5.49%.
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 ended December 31, 2024, CHKP’s EPS is expected to increase 3.3% year-over-year to $2.65. Its revenue for the same quarter is expected to rise 5.3% year-over-year to $698.82 million. CHKP surpassed the Street EPS estimates in three of the trailing four quarters. Over the past nine months, the stock has gained 31.1% to close the last trading session at $198.20.
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 #8 in the same industry. It has an A grade for Quality. To see CHKP’s Growth, Value, Momentum, Stability, and Sentiment ratings, click here.
Stock #1: 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 app security and performance. It integrates API protection, bot defense, and load balancing, streamlining security and management for 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 4.41% industry average. Similarly, its 28.86% trailing-12-month levered FCF margin is 156.1% higher than the 11.27% industry average. Additionally, its 26.79% trailing-12-month net income margin is 594.5% higher than the 3.86% 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 ended December 31, 2024, to increase 19.1% and 12.8% 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 six months, the stock has gained 69.8% to close the last trading session at $96.77.
FTNT’s strong fundamentals are 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 #5 in the Software – Security industry. Beyond what we stated above, we also have given FTNT grades for Growth, Value, Momentum, and Security. Get all the FTNT ratings here.
What To Do Next?
Get your hands on this special report with 3 low priced companies with tremendous upside potential even in today’s volatile markets:
3 Stocks to DOUBLE This Year >
FTNT shares were trading at $99.38 per share on Tuesday afternoon, up $2.61 (+2.70%). Year-to-date, FTNT has gained 5.19%, versus a 3.05% 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.
3 Cybersecurity Firms Safeguarding the Digital World StockNews.com
