Critical Comparison: Synopsys (NASDAQ:SNPS) versus Check Point Software Technologies (NASDAQ:CHKP)

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

Institutional & Insider Ownership

87.6% of Check Point Software Technologies shares are owned by institutional investors. Comparatively, 85.5% of Synopsys shares are owned by institutional investors. 29.0% of Check Point Software Technologies shares are owned by company insiders. Comparatively, 0.7% of Synopsys shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Check Point Software Technologies and Synopsys”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Check Point Software Technologies	$2.52 billion	7.59	$840.30 million	$7.32	23.80
Synopsys	$5.84 billion	13.69	$1.23 billion	$9.64	54.02

Synopsys has higher revenue and earnings than Check Point Software Technologies. Check Point Software Technologies is trading at a lower price-to-earnings ratio than Synopsys, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent ratings for Check Point Software Technologies and Synopsys, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Check Point Software Technologies	0	15	8	0	2.35
Synopsys	0	0	11	0	3.00

Check Point Software Technologies presently has a consensus target price of $197.74, suggesting a potential upside of 13.48%. Synopsys has a consensus target price of $649.82, suggesting a potential upside of 24.79%. Given Synopsys’ stronger consensus rating and higher probable upside, analysts plainly believe Synopsys is more favorable than Check Point Software Technologies.

Risk & Volatility

Check Point Software Technologies has a beta of 0.63, meaning that its share price is 37% less volatile than the S&P 500. Comparatively, Synopsys has a beta of 1.08, meaning that its share price is 8% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Check Point Software Technologies	33.17%	31.84%	16.06%
Synopsys	24.06%	22.09%	14.05%

Summary

Synopsys beats Check Point Software Technologies on 9 of the 14 factors compared between the two stocks.

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.

About Synopsys

Synopsys, Inc. provides electronic design automation software products used to design and test integrated circuits. It operates in three segments: Design Automation, Design IP, and Software Integrity. The company offers Digital and Custom IC Design solution that provides digital design implementation solutions; Verification solution that offers virtual prototyping, static and formal verification, simulation, emulation, field programmable gate array (FPGA)-based prototyping, and debug solutions; and FPGA design products that are programmed to perform specific functions. It also provides intellectual property (IP) solutions for USB, PCI Express, DDR, Ethernet, MIPI, HDMI, and Bluetooth low energy applications; logic libraries and embedded memories; processor cores, software, and application-specific instruction-set processor tools for embedded applications; security IP solutions; IP solutions for automotive market; and system-on-chip (SoC) infrastructure IP, datapath and building block IP, and verification IP products, as well as mathematical and floating-point components, and Arm AMBA interconnect fabric and peripherals. In addition, the company offers HAPS FPGA-based prototyping systems; virtual prototyping solutions; and Platform Architect solutions for SoC architecture analysis and optimization, as well as optical products, and mechatronic simulations. Further, it provides security and quality testing products, managed services, programs and professional services, and training that enable its customers to detect and remediate security vulnerabilities, and defects in the software development lifecycle, as well as manufacturing solutions. Additionally, the company provides intelligent orchestration solution, software risk manager, and black duck software composition analysis tools. It serves electronics, financial services, automotive, medicine, energy, and industrial areas. The company was incorporated in 1986 and is headquartered in Sunnyvale, California.