FORTINET INC (FTNT) Stock Fundamental Analysis
NASDAQ:FTNT - Nasdaq - US34959E1091 - Common Stock - Currency: USD
We assign a fundamental rating of 7 out of 10 to FTNT. FTNT was compared to 282 industry peers in the Software industry. Both the health and profitability get an excellent rating, making FTNT a very profitable company, without any liquidiy or solvency issues. FTNT is not overvalued while it is showing excellent growth. This is an interesting combination. These ratings would make FTNT suitable for growth and quality investing!
1. Profitability
1.1 Basic Checks
In the past year FTNT was profitable.
FTNT had a positive operating cash flow in the past year.
Each year in the past 5 years FTNT has been profitable.
Each year in the past 5 years FTNT had a positive operating cash flow.
1.2 Ratios
FTNT has a better Return On Assets (18.06%) than 93.97% of its industry peers.
FTNT has a better Return On Equity (95.74%) than 98.94% of its industry peers.
With an excellent Return On Invested Capital value of 30.04%, FTNT belongs to the best of the industry, outperforming 96.81% of the companies in the same industry.
FTNT had an Average Return On Invested Capital over the past 3 years of 28.58%. This is significantly above the industry average of 12.26%.
The 3 year average ROIC (28.58%) for FTNT is below the current ROIC(30.04%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 18.06% | ||
| ROE | 95.74% | ||
| ROIC | 30.04% |
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
Looking at the Profit Margin, with a value of 30.60%, FTNT belongs to the top of the industry, outperforming 94.68% of the companies in the same industry.
In the last couple of years the Profit Margin of FTNT has grown nicely.
FTNT has a Operating Margin of 31.67%. This is amongst the best in the industry. FTNT outperforms 95.74% of its industry peers.
In the last couple of years the Operating Margin of FTNT has grown nicely.
FTNT has a better Gross Margin (81.65%) than 86.17% of its industry peers.
FTNT's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 31.67% | ||
| PM (TTM) | 30.6% | ||
| GM | 81.65% |
OM growth 3Y16.85%
OM growth 5Y13.69%
PM growth 3Y17.3%
PM growth 5Y13.83%
GM growth 3Y1.97%
GM growth 5Y1.17%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), FTNT 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 7.19. This indicates that FTNT is financially healthy and has little risk of bankruptcy at the moment.
FTNT has a better Altman-Z score (7.19) than 76.60% of its industry peers.
The Debt to FCF ratio of FTNT is 0.48, which is an excellent value as it means it would take FTNT, only 0.48 years of fcf income to pay off all of its debts.
FTNT has a Debt to FCF ratio of 0.48. This is in the better half of the industry: FTNT outperforms 78.37% of its industry peers.
FTNT has a Debt/Equity ratio of 0.25. This is a healthy value indicating a solid balance between debt and equity.
FTNT has a Debt to Equity ratio (0.25) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.25 | ||
| Debt/FCF | 0.48 | ||
| Altman-Z | 7.19 |
ROIC/WACC2.77
WACC10.85%
2.3 Liquidity
FTNT has a Current Ratio of 1.36. This is a normal value and indicates that FTNT is financially healthy and should not expect problems in meeting its short term obligations.
FTNT has a Current ratio of 1.36. This is comparable to the rest of the industry: FTNT outperforms 43.62% of its industry peers.
A Quick Ratio of 1.29 indicates that FTNT should not have too much problems paying its short term obligations.
With a Quick ratio value of 1.29, FTNT perfoms like the industry average, outperforming 42.20% 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 | 1.36 | ||
| Quick Ratio | 1.29 |
3. Growth
3.1 Past
FTNT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 45.66%, 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 13.83%.
The Revenue has been growing by 22.46% on average over the past years. This is a very strong growth!
EPS 1Y (TTM)45.66%
EPS 3Y43.86%
EPS 5Y36.84%
EPS Q2Q%34.88%
Revenue 1Y (TTM)13.83%
Revenue growth 3Y21.24%
Revenue growth 5Y22.46%
Sales Q2Q%13.77%
3.2 Future
The Earnings Per Share is expected to grow by 9.15% on average over the next years. This is quite good.
FTNT is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 13.49% yearly.
EPS Next Y6.82%
EPS Next 2Y10.34%
EPS Next 3Y12.2%
EPS Next 5Y9.15%
Revenue Next Year14.76%
Revenue Next 2Y13.84%
Revenue Next 3Y13.86%
Revenue Next 5Y13.49%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
The estimated forward Revenue growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 42.32, FTNT can be considered very expensive at the moment.
Based on the Price/Earnings ratio, FTNT is valued a bit cheaper than 63.83% of the companies in the same industry.
FTNT's Price/Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 27.29.
The Price/Forward Earnings ratio is 36.96, which means the current valuation is very expensive for FTNT.
Compared to the rest of the industry, the Price/Forward Earnings ratio of FTNT is on the same level as its industry peers.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.74, FTNT is valued quite expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 42.32 | ||
| Fwd PE | 36.96 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, FTNT is valued a bit cheaper than 71.99% of the companies in the same industry.
68.44% of the companies in the same industry are more expensive than FTNT, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 39.48 | ||
| EV/EBITDA | 36.58 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The excellent profitability rating of FTNT may justify a higher PE ratio.
FTNT's earnings are expected to grow with 12.20% in the coming years. This may justify a more expensive valuation.
PEG (NY)6.21
PEG (5Y)1.15
EPS Next 2Y10.34%
EPS Next 3Y12.2%
5. Dividend
5.1 Amount
FTNT does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
106.65
+0.99 (+0.94%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners70.95%
Inst Owner Change-0.18%
Ins Owners16.94%
Ins Owner Change0.5%
Market Cap81.63B
Analysts68.63
Price Target110.36 (3.48%)
Short Float %2.78%
Short Ratio3.75
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
Yearly DividendN/A
Dividend Growth(5Y)N/A
DPN/A
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)13.09%
Min EPS beat(2)6.61%
Max EPS beat(2)19.58%
EPS beat(4)4
Avg EPS beat(4)20.63%
Min EPS beat(4)6.61%
Max EPS beat(4)36.59%
EPS beat(8)8
Avg EPS beat(8)15.88%
EPS beat(12)12
Avg EPS beat(12)15.02%
EPS beat(16)16
Avg EPS beat(16)13.18%
Revenue beat(2)1
Avg Revenue beat(2)0.05%
Min Revenue beat(2)-1.99%
Max Revenue beat(2)2.1%
Revenue beat(4)2
Avg Revenue beat(4)0.05%
Min Revenue beat(4)-1.99%
Max Revenue beat(4)2.1%
Revenue beat(8)2
Avg Revenue beat(8)-0.99%
Revenue beat(12)4
Avg Revenue beat(12)-0.74%
Revenue beat(16)7
Avg Revenue beat(16)0.35%
PT rev (1m)-4.07%
PT rev (3m)-5.66%
EPS NQ rev (1m)-0.01%
EPS NQ rev (3m)1.23%
EPS NY rev (1m)0.35%
EPS NY rev (3m)0.37%
Revenue NQ rev (1m)-0.06%
Revenue NQ rev (3m)-0.3%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-0.17%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 42.32 | ||
| Fwd PE | 36.96 | ||
| P/S | 13.29 | ||
| P/FCF | 39.48 | ||
| P/OCF | 35.63 | ||
| P/B | 41.59 | ||
| P/tB | 50.85 | ||
| EV/EBITDA | 36.58 |
EPS(TTM)2.52
EY2.36%
EPS(NY)2.89
Fwd EY2.71%
FCF(TTM)2.7
FCFY2.53%
OCF(TTM)2.99
OCFY2.81%
SpS8.02
BVpS2.56
TBVpS2.1
PEG (NY)6.21
PEG (5Y)1.15
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 18.06% | ||
| ROE | 95.74% | ||
| ROCE | 34.25% | ||
| ROIC | 30.04% | ||
| ROICexc | 189.85% | ||
| ROICexgc | 315.2% | ||
| OM | 31.67% | ||
| PM (TTM) | 30.6% | ||
| GM | 81.65% | ||
| FCFM | 33.66% |
ROA(3y)15.82%
ROA(5y)13.96%
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)28.58%
ROIC(5y)24.19%
ROICexc(3y)95.75%
ROICexc(5y)91.08%
ROICexgc(3y)117.7%
ROICexgc(5y)117.86%
ROCE(3y)32.59%
ROCE(5y)27.58%
ROICexcg growth 3Y23.93%
ROICexcg growth 5Y1.09%
ROICexc growth 3Y22.17%
ROICexc growth 5Y2.73%
OM growth 3Y16.85%
OM growth 5Y13.69%
PM growth 3Y17.3%
PM growth 5Y13.83%
GM growth 3Y1.97%
GM growth 5Y1.17%
F-Score7
Asset Turnover0.59
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.25 | ||
| Debt/FCF | 0.48 | ||
| Debt/EBITDA | 0.24 | ||
| Cap/Depr | 171.92% | ||
| Cap/Sales | 3.64% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 110.4% | ||
| Profit Quality | 110.01% | ||
| Current Ratio | 1.36 | ||
| Quick Ratio | 1.29 | ||
| Altman-Z | 7.19 |
F-Score7
WACC10.85%
ROIC/WACC2.77
Cap/Depr(3y)252.71%
Cap/Depr(5y)258.35%
Cap/Sales(3y)5.53%
Cap/Sales(5y)6.06%
Profit Quality(3y)142.53%
Profit Quality(5y)164.41%
High Growth Momentum
Growth
EPS 1Y (TTM)45.66%
EPS 3Y43.86%
EPS 5Y36.84%
EPS Q2Q%34.88%
EPS Next Y6.82%
EPS Next 2Y10.34%
EPS Next 3Y12.2%
EPS Next 5Y9.15%
Revenue 1Y (TTM)13.83%
Revenue growth 3Y21.24%
Revenue growth 5Y22.46%
Sales Q2Q%13.77%
Revenue Next Year14.76%
Revenue Next 2Y13.84%
Revenue Next 3Y13.86%
Revenue Next 5Y13.49%
EBIT growth 1Y51.46%
EBIT growth 3Y41.66%
EBIT growth 5Y39.22%
EBIT Next Year18.29%
EBIT Next 3Y16.03%
EBIT Next 5Y16.33%
FCF growth 1Y13.41%
FCF growth 3Y16%
FCF growth 5Y21.29%
OCF growth 1Y13.87%
OCF growth 3Y14.62%
OCF growth 5Y22.82%