Overall FTNT gets a fundamental rating of 7 out of 10. We evaluated FTNT against 277 industry peers in the Software industry. FTNT scores excellent points on both the profitability and health parts. This is a solid base for a good stock. 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!

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year FTNT was profitable.
In the past year FTNT had a positive cash flow from operations.
FTNT had positive earnings in each of the past 5 years.
In the past 5 years FTNT always reported a positive cash flow from operatings.

1.2 Ratios

With an excellent Return On Assets value of 20.01%, FTNT belongs to the best of the industry, outperforming 95.68% of the companies in the same industry.
FTNT has a Return On Equity of 254.88%. This is amongst the best in the industry. FTNT outperforms 100.00% of its industry peers.
FTNT's Return On Invested Capital of 38.77% is amongst the best of the industry. FTNT outperforms 98.56% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for FTNT is significantly above the industry average of 10.78%.
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

With an excellent Profit Margin value of 28.58%, FTNT belongs to the best of the industry, outperforming 88.85% of the companies in the same industry.
In the last couple of years the Profit Margin of FTNT has grown nicely.
FTNT's Operating Margin of 30.86% is amongst the best of the industry. FTNT outperforms 92.81% of its industry peers.
In the last couple of years the Operating Margin of FTNT has grown nicely.
Looking at the Gross Margin, with a value of 80.86%, FTNT belongs to the top of the industry, outperforming 83.45% of the companies in the same industry.
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

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

2.2 Solvency

An Altman-Z score of 5.51 indicates that FTNT is not in any danger for bankruptcy at the moment.
FTNT's Altman-Z score of 5.51 is fine compared to the rest of the industry. FTNT outperforms 74.46% 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.
The Debt to FCF ratio of FTNT (0.49) is better than 79.14% of its industry peers.
A Debt/Equity ratio of 0.68 indicates that FTNT is somewhat dependend on debt financing.
FTNT's Debt to Equity ratio of 0.68 is on the low side compared to the rest of the industry. FTNT is outperformed by 70.14% of its industry peers.
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

FTNT has a Current Ratio of 1.03. This is a normal value and indicates that FTNT is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 1.03, FTNT is doing worse than 73.38% of the companies in the same industry.
A Quick Ratio of 0.94 indicates that FTNT may have some problems paying its short term obligations.
With a Quick ratio value of 0.94, FTNT is not doing good in the industry: 76.62% of the companies in the same industry are doing better.
FTNT does not score too well on the current and quick ratio evaluation. However, as it has 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

The Earnings Per Share has grown by an impressive 26.17% over the past year.
The Earnings Per Share has been growing by 36.84% on average over the past years. This is a very strong growth
The Revenue has grown by 14.78% in the past year. This is quite good.
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

Based on estimates for the next years, FTNT will show a quite strong growth in Earnings Per Share. The EPS will grow by 9.01% on average per year.
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

The Price/Earnings ratio is 30.24, which means the current valuation is very expensive for FTNT.
Compared to the rest of the industry, the Price/Earnings ratio of FTNT indicates a somewhat cheap valuation: FTNT is cheaper than 62.23% of the companies listed in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 27.21, FTNT is valued at the same level.
FTNT is valuated quite expensively with a Price/Forward Earnings ratio of 27.32.
Compared to the rest of the industry, the Price/Forward Earnings ratio of FTNT indicates a somewhat cheap valuation: FTNT is cheaper than 61.51% of the companies listed in the same industry.
FTNT is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 24.26, which is the current average of the S&P500 Index.

		Industry Rank	Sector Rank
PE	30.24
Fwd PE	27.32

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, FTNT is valued a bit cheaper than 71.58% of the companies in the same industry.
68.70% 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	29.93
EV/EBITDA	26.48

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.