FTNT gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 278 industry peers in the Software industry. FTNT gets an excellent profitability rating and is at the same time showing great financial health properties. FTNT is growing strongly while it is still valued neutral. This is a good combination! These ratings could make FTNT a good candidate for growth and quality investing.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

FTNT had positive earnings in the past year.
In the past year FTNT had a positive cash flow from operations.
In the past 5 years FTNT has always been profitable.
Each year in the past 5 years FTNT had a positive operating cash flow.

1.2 Ratios

FTNT's Return On Assets of 20.01% is amongst the best of the industry. FTNT outperforms 95.32% of its industry peers.
Looking at the Return On Equity, with a value of 254.88%, FTNT belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 38.77%, FTNT belongs to the top of the industry, outperforming 98.56% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for FTNT is significantly above the industry average of 10.76%.
The last Return On Invested Capital (38.77%) for FTNT is above the 3 year average (28.58%), which is a sign of increasing profitability.

		Industry Rank	Sector Rank
ROA	20.01%
ROE	254.88%
ROIC	38.77%

ROA(3y)15.82%

ROA(5y)13.96%

ROE(3y)N/A

ROE(5y)N/A

ROIC(3y)28.58%

ROIC(5y)24.19%

1.3 Margins

FTNT has a Profit Margin of 28.58%. This is amongst the best in the industry. FTNT outperforms 88.85% of its industry peers.
In the last couple of years the Profit Margin of FTNT has grown nicely.
Looking at the Operating Margin, with a value of 30.86%, FTNT belongs to the top of the industry, outperforming 92.81% of the companies in the same industry.
FTNT's Operating Margin has improved in the last couple of years.
FTNT has a Gross Margin of 80.86%. This is amongst the best in the industry. FTNT outperforms 83.81% of its industry peers.
FTNT's Gross Margin has been stable in the last couple of years.

		Industry Rank	Sector Rank
OM	30.86%
PM (TTM)	28.58%
GM	80.86%

OM growth 3Y16.85%

OM growth 5Y13.69%

PM growth 3Y17.3%

PM growth 5Y13.83%

GM growth 3Y1.97%

GM growth 5Y1.17%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

FTNT has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
Compared to 1 year ago, FTNT has about the same amount of shares outstanding.
The number of shares outstanding for FTNT has been reduced compared to 5 years ago.
FTNT has a better debt/assets ratio than last year.

2.2 Solvency

FTNT has an Altman-Z score of 5.51. This indicates that FTNT is financially healthy and has little risk of bankruptcy at the moment.
FTNT has a better Altman-Z score (5.51) than 74.82% of its industry peers.
FTNT has a debt to FCF ratio of 0.49. This is a very positive value and a sign of high solvency as it would only need 0.49 years to pay back of all of its debts.
FTNT's Debt to FCF ratio of 0.49 is fine compared to the rest of the industry. FTNT outperforms 79.14% of its industry peers.
A Debt/Equity ratio of 0.68 indicates that FTNT is somewhat dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.68, FTNT is doing worse than 70.14% of the companies in the same industry.
Although FTNT does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.

		Industry Rank	Sector Rank
Debt/Equity	0.68
Debt/FCF	0.49
Altman-Z	5.51

ROIC/WACC3.5

WACC11.09%

2.3 Liquidity

A Current Ratio of 1.03 indicates that FTNT should not have too much problems paying its short term obligations.
FTNT's Current ratio of 1.03 is on the low side compared to the rest of the industry. FTNT is outperformed by 73.02% of its industry peers.
FTNT has a Quick Ratio of 1.03. This is a bad value and indicates that FTNT is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 0.94, FTNT is doing worse than 76.26% of the companies in the same industry.
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.

		Industry Rank	Sector Rank
Current Ratio	1.03
Quick Ratio	0.94

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

FTNT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 26.17%, which is quite impressive.
The Earnings Per Share has been growing by 36.84% on average over the past years. This is a very strong growth
FTNT shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 14.78%.
Measured over the past years, FTNT shows a very strong growth in Revenue. The Revenue has been growing by 22.46% on average per year.

EPS 1Y (TTM)26.17%

EPS 3Y43.86%

EPS 5Y36.84%

EPS Q2Q%17.46%

Revenue 1Y (TTM)14.78%

Revenue growth 3Y21.24%

Revenue growth 5Y22.46%

Sales Q2Q%14.38%

3.2 Future

FTNT is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 9.01% yearly.
FTNT is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 12.42% yearly.

EPS Next Y15.71%

EPS Next 2Y12.28%

EPS Next 3Y11.85%

EPS Next 5Y9.01%

Revenue Next Year14.66%

Revenue Next 2Y12.91%

Revenue Next 3Y12.15%

Revenue Next 5Y12.42%

3.3 Evolution

The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
Although the future Revenue growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.

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4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 30.40 indicates a quite expensive valuation of FTNT.
Based on the Price/Earnings ratio, FTNT is valued a bit cheaper than the industry average as 61.87% of the companies are valued more expensively.
FTNT's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 28.82.
With a Price/Forward Earnings ratio of 27.47, FTNT can be considered very expensive at the moment.
FTNT's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. FTNT is cheaper than 61.51% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 25.95, FTNT is valued at the same level.

		Industry Rank	Sector Rank
PE	30.4
Fwd PE	27.47

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of FTNT indicates a somewhat cheap valuation: FTNT is cheaper than 71.58% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, FTNT is valued a bit cheaper than the industry average as 68.35% of the companies are valued more expensively.

		Industry Rank	Sector Rank
P/FCF	30.09
EV/EBITDA	26.5

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates FTNT does not grow enough to justify the current Price/Earnings ratio.
FTNT has an outstanding profitability rating, which may justify a higher PE ratio.