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NASDAQ:FTNT is not too expensive for the growth it is showing.

By Mill Chart

Last update: Nov 9, 2023

FORTINET INC (NASDAQ:FTNT) has caught the eye of our stock screener as an affordable growth stock. NASDAQ:FTNT is displaying robust growth metrics and also excels in terms of profitability, solvency, and liquidity. Additionally, it appears to be reasonably priced. Let's delve into the details.

Growth Analysis for NASDAQ:FTNT

ChartMill employs its own Growth Rating system for all stocks. This score, ranging from 0 to 10, is derived by evaluating different growth factors, such as EPS and revenue growth, taking into account both past performance and future projections. NASDAQ:FTNT has earned a 8 for growth:

  • FTNT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 56.37%, 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 41.93% on average per year.
  • FTNT shows a strong growth in Revenue. In the last year, the Revenue has grown by 26.22%.
  • Measured over the past years, FTNT shows a very strong growth in Revenue. The Revenue has been growing by 24.20% on average per year.
  • Based on estimates for the next years, FTNT will show a quite strong growth in Earnings Per Share. The EPS will grow by 18.13% on average per year.
  • Based on estimates for the next years, FTNT will show a quite strong growth in Revenue. The Revenue will grow by 18.69% on average per year.

ChartMill's Evaluation of Valuation

ChartMill assigns a Valuation Rating to each stock, ranging from 0 to 10. This rating is calculated by analyzing different valuation elements, such as price to earnings and free cash flow, both in absolute terms and relative to the market and industry. In the case of NASDAQ:FTNT, the assigned 5 reflects its valuation:

  • Compared to the rest of the industry, the Price/Earnings ratio of FTNT indicates a somewhat cheap valuation: FTNT is cheaper than 76.45% of the companies listed in the same industry.
  • Compared to the rest of the industry, the Price/Forward Earnings ratio of FTNT indicates a somewhat cheap valuation: FTNT is cheaper than 74.64% of the companies listed in the same industry.
  • Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of FTNT indicates a rather cheap valuation: FTNT is cheaper than 81.52% of the companies listed in the same industry.
  • 86.23% of the companies in the same industry are more expensive than FTNT, based on the Price/Free Cash Flow ratio.
  • The excellent profitability rating of FTNT may justify a higher PE ratio.
  • FTNT's earnings are expected to grow with 22.37% in the coming years. This may justify a more expensive valuation.

Looking at the Health

ChartMill assigns a proprietary Health Rating to each stock. The score is computed by evaluating various liquidity and solvency ratios and ranges from 0 to 10. NASDAQ:FTNT was assigned a score of 8 for health:

  • FTNT has an Altman-Z score of 4.31. This indicates that FTNT is financially healthy and has little risk of bankruptcy at the moment.
  • The Altman-Z score of FTNT (4.31) is better than 70.65% of its industry peers.
  • FTNT has a debt to FCF ratio of 0.48. This is a very positive value and a sign of high solvency as it would only need 0.48 years to pay back of all of its debts.
  • FTNT has a better Debt to FCF ratio (0.48) than 82.97% 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.
  • 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.

Profitability Assessment of NASDAQ:FTNT

Discover ChartMill's exclusive Profitability Rating, a proprietary metric that assesses stocks on a scale of 0 to 10. It takes into consideration various profitability ratios and margins, both in absolute terms and relative to industry peers. Notably, NASDAQ:FTNT has achieved a 9:

  • With an excellent Return On Assets value of 15.39%, FTNT belongs to the best of the industry, outperforming 96.01% of the companies in the same industry.
  • The Return On Equity of FTNT (1552.90%) is better than 100.00% of its industry peers.
  • FTNT has a better Return On Invested Capital (24.93%) than 98.19% 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 10.43%.
  • The 3 year average ROIC (18.64%) for FTNT is below the current ROIC(24.93%), indicating increased profibility in the last year.
  • FTNT has a Profit Margin of 22.25%. This is amongst the best in the industry. FTNT outperforms 94.20% of its industry peers.
  • FTNT's Profit Margin has improved in the last couple of years.
  • Looking at the Operating Margin, with a value of 23.37%, FTNT belongs to the top of the industry, outperforming 93.48% of the companies in the same industry.
  • In the last couple of years the Operating Margin of FTNT has grown nicely.
  • FTNT has a better Gross Margin (76.44%) than 73.19% of its industry peers.

Our Affordable Growth screener lists more Affordable Growth stocks and is updated daily.

For an up to date full fundamental analysis you can check the fundamental report of FTNT

Disclaimer

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.

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FORTINET INC

NASDAQ:FTNT (2/22/2024, 7:00:00 PM)

Premarket: 67.12 +0.16 (+0.24%)

66.96

+1.62 (+2.48%)

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