FORTINET INC (FTNT)
US34959E1091 - Common Stock
We assign a fundamental rating of 7 out of 10 to FTNT. FTNT was compared to 278 industry peers in the Software industry. FTNT scores excellent on profitability, but there are some minor concerns on its financial health. FTNT is growing strongly while it is still valued neutral. This is a good combination! These ratings would make FTNT suitable for growth investing!
1. Profitability
1.1 Basic Checks
FTNT had positive earnings in the past year.
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 (17.28%) than 93.88% of its industry peers.
Looking at the Return On Equity, with a value of 168.47%, FTNT belongs to the top of the industry, outperforming 99.64% of the companies in the same industry.
With an excellent Return On Invested Capital value of 25.60%, FTNT belongs to the best of the industry, outperforming 96.04% of the companies in the same industry.
FTNT had an Average Return On Invested Capital over the past 3 years of 21.99%. This is significantly above the industry average of 12.36%.
The 3 year average ROIC (21.99%) for FTNT is below the current ROIC(25.60%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 17.28% | ||
| ROE | 168.47% | ||
| ROIC | 25.6% |
ROA(3y)13.28%
ROA(5y)12.09%
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)21.99%
ROIC(5y)18.99%
1.3 Margins
FTNT's Profit Margin of 26.79% is amongst the best of the industry. FTNT outperforms 92.81% of its industry peers.
FTNT's Profit Margin has improved in the last couple of years.
FTNT has a Operating Margin of 28.19%. This is amongst the best in the industry. FTNT outperforms 94.24% of its industry peers.
FTNT's Operating Margin has improved in the last couple of years.
The Gross Margin of FTNT (79.71%) is better than 77.34% of its industry peers.
In the last couple of years the Gross Margin of FTNT has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 28.19% | ||
| PM (TTM) | 26.79% | ||
| GM | 79.71% |
OM growth 3Y7.15%
OM growth 5Y12.69%
PM growth 3Y4.74%
PM growth 5Y3.25%
GM growth 3Y-0.58%
GM growth 5Y0.44%
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 less shares outstanding
FTNT has less shares outstanding than it did 5 years ago.
FTNT has a better debt/assets ratio than last year.
2.2 Solvency
FTNT has an Altman-Z score of 6.84. This indicates that FTNT is financially healthy and has little risk of bankruptcy at the moment.
FTNT has a Altman-Z score of 6.84. This is in the better half of the industry: FTNT outperforms 70.86% of its industry peers.
The Debt to FCF ratio of FTNT is 0.60, which is an excellent value as it means it would take FTNT, only 0.60 years of fcf income to pay off all of its debts.
FTNT's Debt to FCF ratio of 0.60 is fine compared to the rest of the industry. FTNT outperforms 76.98% of its industry peers.
A Debt/Equity ratio of 1.09 is on the high side and indicates that FTNT has dependencies on debt financing.
FTNT's Debt to Equity ratio of 1.09 is on the low side compared to the rest of the industry. FTNT is outperformed by 77.70% 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 | 1.09 | ||
| Debt/FCF | 0.6 | ||
| Altman-Z | 6.84 |
ROIC/WACC2.25
WACC11.37%
2.3 Liquidity
A Current Ratio of 1.34 indicates that FTNT should not have too much problems paying its short term obligations.
The Current ratio of FTNT (1.34) is comparable to the rest of the industry.
A Quick Ratio of 1.25 indicates that FTNT should not have too much problems paying its short term obligations.
FTNT has a Quick ratio of 1.25. This is in the lower half of the industry: FTNT underperforms 61.87% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.34 | ||
| Quick Ratio | 1.25 |
3. Growth
3.1 Past
FTNT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 36.31%, which is quite impressive.
The Earnings Per Share has been growing by 35.13% 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 10.40%.
FTNT shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 24.11% yearly.
EPS 1Y (TTM)36.31%
EPS 3Y34.64%
EPS 5Y35.13%
EPS Q2Q%53.66%
Revenue 1Y (TTM)10.4%
Revenue growth 3Y26.92%
Revenue growth 5Y24.11%
Sales Q2Q%13%
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 16.69% on average per year.
FTNT is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 14.76% yearly.
EPS Next Y39.66%
EPS Next 2Y22.94%
EPS Next 3Y19.73%
EPS Next 5Y16.69%
Revenue Next Year11.11%
Revenue Next 2Y11.85%
Revenue Next 3Y12.25%
Revenue Next 5Y14.76%
3.3 Evolution
Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of the past 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.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 44.54, which means the current valuation is very expensive for FTNT.
FTNT's Price/Earnings ratio is a bit cheaper when compared to the industry. FTNT is cheaper than 64.39% of the companies in the same industry.
FTNT is valuated rather expensively when we compare the Price/Earnings ratio to 29.70, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 38.45, FTNT can be considered very expensive at the moment.
63.31% of the companies in the same industry are more expensive than FTNT, based on the Price/Forward Earnings ratio.
The average S&P500 Price/Forward Earnings ratio is at 24.16. FTNT is valued rather expensively when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 44.54 | ||
| Fwd PE | 38.45 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, FTNT is valued a bit cheaper than the industry average as 70.50% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, FTNT is valued a bit cheaper than the industry average as 67.99% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 43.91 | ||
| EV/EBITDA | 40.01 |
4.3 Compensation for Growth
FTNT's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
FTNT has an outstanding profitability rating, which may justify a higher PE ratio.
FTNT's earnings are expected to grow with 19.73% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.12
PEG (5Y)1.27
EPS Next 2Y22.94%
EPS Next 3Y19.73%
5. Dividend
5.1 Amount
No dividends for FTNT!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
FORTINET INC
NASDAQ:FTNT (12/2/2024, 8:00:00 PM)
Premarket: 95.32 0 (0%)95.32
+0.27 (+0.28%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap73.06B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
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PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
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Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 44.54 | ||
| Fwd PE | 38.45 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)1.12
PEG (5Y)1.27
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 17.28% | ||
| ROE | 168.47% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 28.19% | ||
| PM (TTM) | 26.79% | ||
| GM | 79.71% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.65
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.09 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.34 | ||
| Quick Ratio | 1.25 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
High Growth Momentum
Growth
EPS 1Y (TTM)36.31%
EPS 3Y34.64%
EPS 5Y
EPS Q2Q%
EPS Next Y39.66%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)10.4%
Revenue growth 3Y26.92%
Revenue growth 5Y
Sales Q2Q%
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y