Comparative Analysis in the Cybersecurity Industry of Check Point Software Technologies and Palo Alto Networks Years 2014-2018 the Reliability of the Companies and the Optimal Way of Financing Them

Carlos Mizrahi Nedvedovich

Bachelor's thesis

Abstract:

Abstracts The scope of this bachelor thesis is performing a comparative financial analysis of two major competitors of the fast-growing cybersecurity industry, Check Point Software Technologies Ltd., and Palo Alto Networks, Inc. The analysis will be performed in sequence to firstly identifying the companies´ capital structure to understand the type of strategy the companies have decided to use, followed by ratio analysis to identify the companies´ financial strengths and weaknesses, and lastly, with the bankruptcy model to evaluate the sustainability or potential failure of the companies. The main goal of this bachelor thesis is to provide an insight on the financial performance of the selected two companies from the year 2014 through 2018 and to evaluate whether they have been financed efficiently as well as to determine their sustainability towards the future. Moreover, the purpose of this thesis is to gather the findings to provide suggestions or potential improvements on possibly discrepancies in the financial analysis for both companies. Accordingly, the findings will discover that despite Check Point´s sterling financials, potential improvements can be made in the capital allocation to reduce the cost of capital and enhance the return to the investors as well as to Palo Alto´s reduction of operational costs will ensure the company´s profitability and sustainability. In consequence, the information will be available and will enable the reader to ease the decision-making.

Abstract:

Abstracts The scope of this bachelor thesis is performing a comparative financial analysis of two major competitors of the fast-growing cybersecurity industry, Check Point Software Technologies Ltd., and Palo Alto Networks, Inc. The analysis will be performed in sequence to firstly identifying the companies´ capital structure to understand the type of strategy the companies have decided to use, followed by ratio analysis to identify the companies´ financial strengths and weaknesses, and lastly, with the bankruptcy model to evaluate the sustainability or potential failure of the companies. The main goal of this bachelor thesis is to provide an insight on the financial performance of the selected two companies from the year 2014 through 2018 and to evaluate whether they have been financed efficiently as well as to determine their sustainability towards the future. Moreover, the purpose of this thesis is to gather the findings to provide suggestions or potential improvements on possibly discrepancies in the financial analysis for both companies. Accordingly, the findings will discover that despite Check Point´s sterling financials, potential improvements can be made in the capital allocation to reduce the cost of capital and enhance the return to the investors as well as to Palo Alto´s reduction of operational costs will ensure the company´s profitability and sustainability. In consequence, the information will be available and will enable the reader to ease the decision-making.

Keywords

Financial Analysis, Cybersecurity Industry, Check Point Software Technologies, Palo Alto Networks, Financial Ratios, Cost of Capital, Financial Performance, Return on Equity, Financial Distress

Language used: English

Date on which the thesis was submitted / produced: 3. 5. 2019

Thesis defence

• Date of defence: 13. 6. 2019
• Supervisor: Ing. Eva Kostikov, Ph.D.
• Reader: Ing. Michal Bock

University of Finance and Administration

Bachelor programme / field:
Economics and Management / Business Management and Corporate Finance