Overall FTNT gets a fundamental rating of 7 out of 10. We evaluated FTNT against 278 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 priced too expensively while it is growing strongly. Keep and eye on this one! 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

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

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.
FTNT's Return On Equity of 254.88% is amongst the best of the industry. FTNT outperforms 100.00% of its industry peers.
FTNT has a better Return On Invested Capital (38.77%) than 98.56% of its industry peers.
FTNT had an Average Return On Invested Capital over the past 3 years of 28.58%. This is significantly above the industry average of 10.76%.
The 3 year average ROIC (28.58%) for FTNT is below the current ROIC(38.77%), indicating increased profibility in the last year.

		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.
The Operating Margin of FTNT (30.86%) is better than 92.81% of its industry peers.
In the last couple of years the Operating Margin of FTNT has grown nicely.
FTNT's Gross Margin of 80.86% is amongst the best of 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

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

2.2 Solvency

An Altman-Z score of 5.58 indicates that FTNT is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 5.58, FTNT is in the better half of the industry, outperforming 75.18% of the companies in the same industry.
The Debt to FCF ratio of FTNT is 0.49, which is an excellent value as it means it would take FTNT, only 0.49 years of fcf income to pay off 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.
FTNT has a Debt/Equity ratio of 0.68. This is a neutral value indicating 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	5.58

ROIC/WACC3.5

WACC11.07%

2.3 Liquidity

A Current Ratio of 1.03 indicates that FTNT should not have too much problems paying its short term obligations.
FTNT has a Current ratio of 1.03. This is in the lower half of the industry: FTNT underperforms 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.
FTNT's Quick ratio of 0.94 is on the low side compared to the rest of the industry. FTNT is outperformed by 76.26% of its industry peers.
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

How to determine the health of a company

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

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

The Earnings Per Share is expected to grow by 9.01% 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 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

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.

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4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 30.26 indicates a quite expensive valuation of FTNT.
Compared to the rest of the industry, the Price/Earnings ratio of FTNT indicates a somewhat cheap valuation: FTNT is cheaper than 61.87% of the companies listed in the same industry.
When comparing the Price/Earnings ratio of FTNT to the average of the S&P500 Index (27.25), we can say FTNT is valued inline with the index average.
The Price/Forward Earnings ratio is 27.35, which means the current valuation is very expensive for FTNT.
61.87% of the companies in the same industry are more expensive than FTNT, based on the Price/Forward Earnings ratio.
FTNT's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 25.98.

		Industry Rank	Sector Rank
PE	30.26
Fwd PE	27.35

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.
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	29.96
EV/EBITDA	26.97

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.