FORTINET INC (FTNT) Stock Fundamental Analysis
NASDAQ:FTNT - Nasdaq - US34959E1091 - Common Stock - Currency: USD
Taking everything into account, FTNT scores 7 out of 10 in our fundamental rating. FTNT was compared to 281 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 growing strongly while it is still valued neutral. This is a good combination! These ratings would make FTNT suitable for growth and quality 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 Return On Assets of 17.88%. This is amongst the best in the industry. FTNT outperforms 93.95% of its industry peers.
FTNT has a better Return On Equity (116.83%) than 98.93% of its industry peers.
FTNT has a Return On Invested Capital of 27.96%. This is amongst the best in the industry. FTNT outperforms 96.80% 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 12.03%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 17.88% | ||
| ROE | 116.83% | ||
| ROIC | 27.96% |
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 better Profit Margin (29.30%) than 92.88% of its industry peers.
FTNT's Profit Margin has improved in the last couple of years.
FTNT has a better Operating Margin (30.52%) than 95.02% of its industry peers.
FTNT's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 80.88%, FTNT belongs to the top of the industry, outperforming 84.34% of the companies in the same industry.
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 | 30.52% | ||
| PM (TTM) | 29.3% | ||
| GM | 80.88% |
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
FTNT has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it 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.
Compared to 1 year ago, FTNT has an improved debt to assets ratio.
2.2 Solvency
An Altman-Z score of 7.23 indicates that FTNT is not in any danger for bankruptcy at the moment.
FTNT has a better Altman-Z score (7.23) than 78.65% of its industry peers.
FTNT has a debt to FCF ratio of 0.53. This is a very positive value and a sign of high solvency as it would only need 0.53 years to pay back of all of its debts.
With a decent Debt to FCF ratio value of 0.53, FTNT is doing good in the industry, outperforming 77.58% of the companies in the same industry.
FTNT has a Debt/Equity ratio of 0.67. This is a neutral value indicating FTNT is somewhat dependend on debt financing.
FTNT has a Debt to Equity ratio of 0.67. This is in the lower half of the industry: FTNT underperforms 68.68% of its industry peers.
Even though the debt/equity ratio score it not favorable for FTNT, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.67 | ||
| Debt/FCF | 0.53 | ||
| Altman-Z | 7.23 |
ROIC/WACC2.68
WACC10.44%
2.3 Liquidity
A Current Ratio of 1.47 indicates that FTNT should not have too much problems paying its short term obligations.
With a Current ratio value of 1.47, FTNT perfoms like the industry average, outperforming 44.84% of the companies in the same industry.
A Quick Ratio of 1.39 indicates that FTNT should not have too much problems paying its short term obligations.
Looking at the Quick ratio, with a value of 1.39, FTNT is in line with its industry, outperforming 43.77% of the companies in the same industry.
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 | 1.47 | ||
| Quick Ratio | 1.39 |
3. Growth
3.1 Past
FTNT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 44.51%, which is quite impressive.
FTNT shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 36.84% yearly.
Looking at the last year, FTNT shows a quite strong growth in Revenue. The Revenue has grown by 12.27% in the last year.
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)44.51%
EPS 3Y43.86%
EPS 5Y36.84%
EPS Q2Q%45.1%
Revenue 1Y (TTM)12.27%
Revenue growth 3Y21.24%
Revenue growth 5Y22.46%
Sales Q2Q%17.31%
3.2 Future
The Earnings Per Share is expected to grow by 9.09% on average over the next years. This is quite good.
Based on estimates for the next years, FTNT will show a quite strong growth in Revenue. The Revenue will grow by 13.70% on average per year.
EPS Next Y6.26%
EPS Next 2Y10.07%
EPS Next 3Y13.08%
EPS Next 5Y9.09%
Revenue Next Year14.81%
Revenue Next 2Y13.87%
Revenue Next 3Y14.65%
Revenue Next 5Y13.7%
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
FTNT is valuated quite expensively with a Price/Earnings ratio of 43.78.
60.50% of the companies in the same industry are more expensive than FTNT, based on the Price/Earnings ratio.
FTNT is valuated expensively when we compare the Price/Earnings ratio to 28.88, which is the current average of the S&P500 Index.
Based on the Price/Forward Earnings ratio of 41.20, the valuation of FTNT can be described as expensive.
Compared to the rest of the industry, the Price/Forward Earnings ratio of FTNT is on the same level as its industry peers.
FTNT's Price/Forward Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 21.20.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 43.78 | ||
| Fwd PE | 41.2 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, FTNT is valued a bit cheaper than the industry average as 70.11% of the companies are valued more expensively.
62.28% 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 | 42.46 | ||
| EV/EBITDA | 38.92 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates FTNT does not grow enough to justify the current Price/Earnings ratio.
The excellent profitability rating of FTNT may justify a higher PE ratio.
A more expensive valuation may be justified as FTNT's earnings are expected to grow with 13.08% in the coming years.
PEG (NY)6.99
PEG (5Y)1.19
EPS Next 2Y10.07%
EPS Next 3Y13.08%
5. Dividend
5.1 Amount
FTNT does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
103.76
-0.45 (-0.43%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners70.96%
Inst Owner Change0.4%
Ins Owners17.47%
Ins Owner Change0.59%
Market Cap79.79B
Analysts69.8
Price Target115.37 (11.19%)
Short Float %3.03%
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)19.66%
Min EPS beat(2)19.58%
Max EPS beat(2)19.74%
EPS beat(4)4
Avg EPS beat(4)21.36%
Min EPS beat(4)9.53%
Max EPS beat(4)36.59%
EPS beat(8)8
Avg EPS beat(8)17.09%
EPS beat(12)12
Avg EPS beat(12)15.8%
EPS beat(16)16
Avg EPS beat(16)13.22%
Revenue beat(2)1
Avg Revenue beat(2)0.99%
Min Revenue beat(2)-0.13%
Max Revenue beat(2)2.1%
Revenue beat(4)2
Avg Revenue beat(4)0.34%
Min Revenue beat(4)-0.86%
Max Revenue beat(4)2.1%
Revenue beat(8)3
Avg Revenue beat(8)-0.36%
Revenue beat(12)5
Avg Revenue beat(12)-0.09%
Revenue beat(16)8
Avg Revenue beat(16)0.61%
PT rev (1m)-1.38%
PT rev (3m)18.11%
EPS NQ rev (1m)-0.02%
EPS NQ rev (3m)0.72%
EPS NY rev (1m)-0.15%
EPS NY rev (3m)1.34%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.58%
Revenue NY rev (1m)-0.13%
Revenue NY rev (3m)1.95%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 43.78 | ||
| Fwd PE | 41.2 | ||
| P/S | 13.4 | ||
| P/FCF | 42.46 | ||
| P/OCF | 35.33 | ||
| P/B | 53.41 | ||
| P/tB | 69.78 | ||
| EV/EBITDA | 38.92 |
EPS(TTM)2.37
EY2.28%
EPS(NY)2.52
Fwd EY2.43%
FCF(TTM)2.44
FCFY2.36%
OCF(TTM)2.94
OCFY2.83%
SpS7.75
BVpS1.94
TBVpS1.49
PEG (NY)6.99
PEG (5Y)1.19
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 17.88% | ||
| ROE | 116.83% | ||
| ROCE | 31.88% | ||
| ROIC | 27.96% | ||
| ROICexc | 97.47% | ||
| ROICexgc | 124.03% | ||
| OM | 30.52% | ||
| PM (TTM) | 29.3% | ||
| GM | 80.88% | ||
| FCFM | 31.55% |
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 Turnover0.61
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.67 | ||
| Debt/FCF | 0.53 | ||
| Debt/EBITDA | 0.51 | ||
| Cap/Depr | 308.55% | ||
| Cap/Sales | 6.36% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 116.36% | ||
| Profit Quality | 107.68% | ||
| Current Ratio | 1.47 | ||
| Quick Ratio | 1.39 | ||
| Altman-Z | 7.23 |
F-Score7
WACC10.44%
ROIC/WACC2.68
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)44.51%
EPS 3Y43.86%
EPS 5Y36.84%
EPS Q2Q%45.1%
EPS Next Y6.26%
EPS Next 2Y10.07%
EPS Next 3Y13.08%
EPS Next 5Y9.09%
Revenue 1Y (TTM)12.27%
Revenue growth 3Y21.24%
Revenue growth 5Y22.46%
Sales Q2Q%17.31%
Revenue Next Year14.81%
Revenue Next 2Y13.87%
Revenue Next 3Y14.65%
Revenue Next 5Y13.7%
EBIT growth 1Y47.01%
EBIT growth 3Y41.66%
EBIT growth 5Y39.22%
EBIT Next Year17.4%
EBIT Next 3Y16.55%
EBIT Next 5Y16.33%
FCF growth 1Y8.54%
FCF growth 3Y16%
FCF growth 5Y21.29%
OCF growth 1Y16.67%
OCF growth 3Y14.62%
OCF growth 5Y22.82%