NASDAQ:FTNT, a growth stock which is not overvalued.

Last update: Oct 16, 2023

Discover FORTINET INC (NASDAQ:FTNT), an undervalued growth gem identified by our stock screener. NASDAQ:FTNT is shining in terms of growth metrics, and it's also displaying strong financial health and profitability. What's more, it retains an appealing valuation. We'll break it down further.

Understanding NASDAQ:FTNT's Growth

To evaluate a stock's growth potential, ChartMill utilizes a Growth Rating on a scale of 0 to 10. This comprehensive assessment considers various growth aspects, including historical and estimated EPS and revenue growth. NASDAQ:FTNT has achieved a 8 out of 10:

FTNT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 70.87%, which is quite impressive.
FTNT shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 41.93% yearly.
The Revenue has grown by 30.71% in the past year. This is a very strong growth!
The Revenue has been growing by 24.20% on average over the past years. This is a very strong growth!
FTNT is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 18.81% yearly.
The Revenue is expected to grow by 19.71% on average over the next years. This is quite good.

Evaluating Valuation: NASDAQ:FTNT

An integral part of ChartMill's stock analysis is the Valuation Rating, which spans from 0 to 10. This rating evaluates diverse valuation factors, including price to earnings and cash flows, while considering the stock's profitability and growth. NASDAQ:FTNT has received a 5 out of 10:

Compared to the rest of the industry, the Price/Earnings ratio of FTNT indicates a somewhat cheap valuation: FTNT is cheaper than 71.94% of the companies listed in the same industry.
Based on the Price/Forward Earnings ratio, FTNT is valued a bit cheaper than 67.63% of the companies in the same industry.
FTNT's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. FTNT is cheaper than 78.42% of the companies in the same industry.
FTNT's Price/Free Cash Flow ratio is rather cheap when compared to the industry. FTNT is cheaper than 83.45% of the companies in the same industry.
The excellent profitability rating of FTNT may justify a higher PE ratio.
A more expensive valuation may be justified as FTNT's earnings are expected to grow with 22.36% in the coming years.

Health Assessment of NASDAQ:FTNT

ChartMill employs a unique Health Rating system for all stocks. This rating, ranging from 0 to 10, is determined by analyzing various liquidity and solvency ratios. For NASDAQ:FTNT, the assigned 8 for health provides valuable insights:

FTNT has an Altman-Z score of 5.01. This indicates that FTNT is financially healthy and has little risk of bankruptcy at the moment.
FTNT has a Altman-Z score of 5.01. This is in the better half of the industry: FTNT outperforms 73.74% of its industry peers.
The Debt to FCF ratio of FTNT is 0.50, which is an excellent value as it means it would take FTNT, only 0.50 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 0.50, FTNT belongs to the top of the industry, outperforming 82.01% of the companies in the same industry.
Even though the debt/equity ratio score it not favorable for FTNT, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
The current and quick ratio evaluation for FTNT is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

Exploring NASDAQ:FTNT's Profitability

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NASDAQ:FTNT, the assigned 9 is noteworthy for profitability:

FTNT's Return On Assets of 14.15% is amongst the best of the industry. FTNT outperforms 96.04% of its industry peers.
With an excellent Return On Equity value of 329.83%, FTNT belongs to the best of the industry, outperforming 99.64% of the companies in the same industry.
The Return On Invested Capital of FTNT (23.22%) is better than 97.48% of its industry peers.
FTNT had an Average Return On Invested Capital over the past 3 years of 18.64%. This is significantly above the industry average of 10.82%.
The 3 year average ROIC (18.64%) for FTNT is below the current ROIC(23.22%), indicating increased profibility in the last year.
The Profit Margin of FTNT (21.24%) is better than 93.53% of its industry peers.
In the last couple of years the Profit Margin of FTNT has grown nicely.
FTNT's Operating Margin of 23.48% is amongst the best of the industry. FTNT outperforms 93.17% of its industry peers.
In the last couple of years the Operating Margin of FTNT has grown nicely.
The Gross Margin of FTNT (76.26%) is better than 72.66% of its industry peers.

More Affordable Growth stocks can be found in our Affordable Growth screener.

Check the latest full fundamental report of FTNT for a complete fundamental analysis.

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.