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Fortinet Inc FTNT

Morningstar Rating
$70.44 +1.33 (1.92%)
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Company Report

Fortinet Earnings: Increased Focus on Execution in Higher Growth Areas Is a Welcome Sight

We are increasing our fair value estimate for wide-moat Fortinet to $77 from $60 after the firm reported strong fourth-quarter results to close out fiscal 2023. Along with strong quarterly results, we are impressed by the continued traction of Fortinet’s Secure Access Service Edge, or SASE, and security operations, or SecOps, businesses. As a result, we are raising our medium- to long-term growth and profitability forecasts for Fortinet as we model in higher software sales over our explicit forecast. Along with an improved financial outlook, we believe investing in newer areas of security could help strengthen the firm’s economic moat, as well. By cross-selling these newer security solutions to its existing customer base of more than 600,000 customers, Fortinet can increase the switching costs associated with its product portfolio. From a valuation perspective, with shares trading up after hours, we view them as fairly valued relative to our updated fair value.

Price vs Fair Value

FTNT is trading at a 9% discount.
Price
$70.44
Fair Value
$55.00
Uncertainty
High
1-Star Price
$489.97
5-Star Price
$57.60
Economic Moat
Lhxd
Capital Allocation
Sthjnzgb

Bulls Say, Bears Say

Bulls

Fortinet has strong secular tailwinds as endpoint security, cloud security, and the convergence of networking and security are projected to grow rapidly.

Bears

Large public cloud vendors often offer their own cybersecurity solutions, which could hamper Fortinet’s growth opportunities.

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News

Trading Information

Previous Close Price
$69.11
Day Range
$68.5770.49
52-Week Range
$44.1281.24
Bid/Ask
$70.40 / $70.56
Market Cap
$53.75 Bil
Volume/Avg
4.8 Mil / 6.6 Mil

Key Statistics

Price/Earnings (Normalized)
42.97
Price/Sales
10.47
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield
2.71%

Company Profile

Fortinet is a platform-based cybersecurity vendor with product offerings covering network security, cloud security, zero-trust access, and security operations. The firm derives a majority of its revenue through sales of its subscriptions and support-based business. The California-based firm has more than 700,000 customers across the world.
Sector
Technology
Industry
Software - Infrastructure
Stock Style Box
Large Growth
Total Number of Employees
13,568

Competitors

Valuation

Metric
FTNT
PANW
CSCO
Price/Earnings (Normalized)
42.9760.8511.74
Price/Book Value
22.404.24
Price/Sales
10.4714.133.46
Price/Cash Flow
30.6845.2912.26
Price/Earnings
FTNT
PANW
CSCO

Financial Strength

Metric
FTNT
PANW
CSCO
Quick Ratio
1.030.741.10
Current Ratio
1.190.831.37
Interest Coverage
58.8155.8833.76
Quick Ratio
FTNT
PANW
CSCO

Profitability

Metric
FTNT
PANW
CSCO
Return on Assets (Normalized)
18.22%12.10%17.02%
Return on Equity (Normalized)
88.54%38.38%
Return on Invested Capital (Normalized)
129.67%32.00%30.59%
Return on Assets
FTNT
PANW
CSCO
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