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Fortinet (FTNT)
NASDAQ:FTNT
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Fortinet
(NASDAQ:FTNT)79Outperform
Positive Factors
Financial Performance
FTNT reported impressive margin outperformance, with high non-GAAP gross and operating margins driven by increased hardware demand and cost efficiencies.
Market Presence
FTNT's customer base includes approximately 80% of the Fortune 100 and 72% of the G2000, showing a strong market presence among top companies.
Negative Factors
Growth Prospects
Limited adoption of FTNT's SASE solutions is noted, which contributes to concerns about the company's growth prospects.
Fortinet (FTNT) vs. S&P 500 (SPY)
Market Cap
$83.06B
Dividend YieldN/A
Average Volume (3M)4.86M
Price to Earnings (P/E)47.1
Beta (1Y)1.06
Revenue Growth12.27%
EPS Growth54.69%
CountryUS
Employees13,568
SectorTechnology
Sector Strength48
IndustrySoftware
Share Statistics
EPS (TTM)2.26
Shares Outstanding768,974,060
10 Day Avg. Volume5,200,934
30 Day Avg. Volume4,861,383
Financial Highlights & Ratios
PEG Ratio0.86
Price to Book (P/B)N/A
Price to Sales (P/S)13.95
Price to Cash Flow (P/CF)43.50
P/FCF Ratio42.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$112.58Price Target Upside5.73% Upside
Rating ConsensusHold
Number of Analyst Covering30
Fortinet Business Overview & Revenue Model
Company DescriptionFortinet, Inc. is a global leader in broad, integrated, and automated cybersecurity solutions. The company provides a comprehensive suite of products and services designed to address the complex security challenges faced by enterprises, service providers, and government organizations worldwide. Fortinet's core offerings include security-driven networking, zero-trust access, dynamic cloud security, AI-driven security operations, and the Fortinet Security Fabric, which provides end-to-end security across the entire digital infrastructure.
How the Company Makes MoneyFortinet generates revenue primarily through the sale of its cybersecurity hardware products, software licenses, and subscription services. The company offers a range of security appliances, such as firewalls and intrusion prevention systems, that form the backbone of its hardware sales. In addition to hardware, Fortinet earns substantial income from its software solutions and security subscriptions, which provide ongoing protection and threat intelligence updates. The subscription model ensures a steady stream of recurring revenue. Additionally, Fortinet offers professional services, including consulting, training, and support, which contribute to its revenue. The company's strategic partnerships with major technology vendors and service providers enhance its market reach and facilitate integrated security solutions, further bolstering its financial performance.
Fortinet Financial Statement Overview
Summary
Fortinet exhibits a strong financial position overall with robust profitability, efficient cash flow generation, and improving balance sheet strength. While prior balance sheet challenges due to negative equity have been mitigated, Fortinet's operational efficiency and revenue growth continue to drive impressive financial results.Income Statement
Fortinet demonstrates strong financial performance with high gross profit margins at 80.57% and significant net profit margins at 29.30% for TTM. Revenue growth rate of 12.27% from the previous year is robust, contributing to overall profitability. EBIT and EBITDA margins are also strong at 30.24% and 34.40% respectively, indicating efficient operational management.92
Very Positive
Balance Sheet
The balance sheet shows a high debt-to-equity ratio due to negative equity in previous years, though it has improved to a positive equity of $1.49 billion recently. Return on Equity (ROE) is not calculable due to negative equity in earlier periods, but positive current equity suggests improved financial health. The equity ratio is 15.30%, indicating limited equity financing relative to assets.75
Positive
Cash Flow
Fortinet's cash flow is strong, with a free cash flow growth rate of 8.54% and a high operating cash flow to net income ratio of 1.29 for TTM, indicating solid cash generation. The free cash flow to net income ratio is 1.08, showing an efficient translation of net income into free cash flow.88
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 5.96B | 5.30B | 4.42B | 3.34B | 2.59B | Gross Profit |
| 4.80B | 4.07B | 3.33B | 2.56B | 2.02B | EBIT |
| 1.80B | 1.24B | 969.60M | 650.40M | 531.80M | EBITDA |
| 1.80B | 1.47B | 1.08B | 727.70M | 560.40M | Net Income Common Stockholders |
| 1.75B | 1.15B | 857.30M | 606.80M | 488.50M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 4.07B | 2.44B | 2.21B | 2.55B | 1.84B | Total Assets |
| 9.76B | 7.26B | 6.23B | 5.92B | 4.04B | Total Debt |
| 994.30M | 1.07B | 990.40M | 988.40M | 53.10M | Net Debt |
| -1.88B | -326.50M | -692.50M | -330.70M | -1.01B | Total Liabilities |
| 8.27B | 7.72B | 6.51B | 5.12B | 3.19B | Stockholders Equity |
| 1.49B | -463.40M | -281.60M | 781.70M | 856.00M |
| Cash Flow | Free Cash Flow | |||
| 1.88B | 1.73B | 1.45B | 1.20B | 957.80M | Operating Cash Flow |
| 2.26B | 1.94B | 1.73B | 1.50B | 1.08B | Investing Cash Flow |
| -727.40M | -649.30M | 763.90M | -1.33B | -72.80M | Financing Cash Flow |
| -50.10M | -1.57B | -2.13B | 82.80M | -1.17B |
Fortinet Technical Analysis
Neutral
106.48
Price Trends
101.40
Positive
95.13
Positive
80.64
Positive
Market Momentum
1.81
Positive
51.04
Neutral
19.07
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FTNT, the sentiment is Neutral. The current price of 106.48 is below the 20-day moving average (MA) of 108.72, above the 50-day MA of 101.40, and above the 200-day MA of 80.64, indicating a neutral trend. The MACD of 1.81 indicates Positive momentum. The RSI at 51.04 is Neutral, neither overbought nor oversold. The STOCH value of 19.07 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for FTNT.
Fortinet Risk Analysis
Fortinet disclosed 60 risk factors in its most recent earnings report. Fortinet reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Fortinet Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $126.08B | 107.58 | 19.68% | ― | 13.86% | -46.44% | |
79 Outperform | $83.06B | 47.14 | 116.83% | ― | 12.27% | 54.69% | |
79 Outperform | $24.22B | 29.53 | 30.32% | ― | 6.22% | 6.15% | |
79 Outperform | $16.86B | 28.27 | 18.38% | ― | 3.02% | 31.36% | |
74 Outperform | $251.67B | 27.72 | 20.18% | 2.52% | -5.34% | -30.57% | |
60 Neutral | $12.06B | 42.07 | 6.02% | 2.44% | -8.82% | -10.01% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% |
* Technology Sector Average
Performance Comparison
FTNT
Fortinet
106.48
37.44
54.23%
CHKP
Check Point
221.22
63.38
40.15%
CSCO
Cisco Systems
63.26
15.81
33.32%
FFIV
F5 Networks
280.11
92.65
49.42%
JNPR
Juniper Networks
35.94
-0.62
-1.70%
PANW
Palo Alto Networks
184.38
38.82
26.67%
Fortinet Earnings Call Summary
Earnings Call Date: Feb 6, 2025 | % Change Since: 1.68% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance and growth in key areas such as unified SaaS and secure operations, alongside record operating margins. However, concerns about weaker billings guidance and geopolitical uncertainties, including potential tariff impacts, added caution to the outlook.Highlights
Record Operating Margin Achieved
Fortinet achieved a record operating margin of 39% in Q4 2024, reflecting strong execution and financial performance.
Total Revenue and Product Revenue Growth
Total revenue grew by 17% with product revenue increasing by 18%, marking the highest growth rate in six quarters.
Strong Performance in Unified SaaS and Secure Operations
Unified SaaS billing growth reached 13%, accounting for 23% of the business, while AI-driven secure operations accounted for 11% of total billings, with ARR growing 32%.
Recognition as a Trusted Company
Fortinet was recognized on Forbes' most trusted company list, ranked number seven overall and the only cybersecurity company in the top fifty.
Significant Fourth-Quarter Wins
Notable seven-figure deals were secured with healthcare providers and Fortune 500 companies, highlighting strategic inclusion of Fortinet's solutions like FortiSASE and SD-WAN.
Lowlights
Weak Billings Guidance for Q1 2025
Billings guidance for the first quarter of 2025 showed weaker growth expectations, with concerns about multinational footprint exposure and potential US government disruptions.
Tariff and Supply Chain Uncertainties
Uncertainty around tariffs and potential retaliatory policies posed challenges, impacting demand and supply chain considerations, particularly in Latin America and Canada.
Company Guidance
During the Fortinet fourth quarter 2024 earnings call, the company provided guidance for the first quarter and full year of 2025, highlighting several key metrics. For the first quarter of 2025, Fortinet projected billings in the range of $1.52 billion to $1.6 billion, representing 11% growth at the midpoint, and revenue between $1.5 billion and $1.56 billion, also indicating 13% growth at the midpoint. Additionally, they anticipated non-GAAP gross margins of 80% to 81% and operating margins between 30% and 31%. For the full year 2025, Fortinet expected billings to reach $7.2 billion to $7.4 billion, with revenue forecasted at $6.65 billion to $6.85 billion, both reflecting 12% and 13% growth, respectively. Other projections included a service revenue range of $4.575 billion to $4.725 billion, a non-GAAP tax rate of 18%, and infrastructure investments amounting to $380 million to $430 million. The company also noted that recent acquisitions were expected to increase billings and revenue growth by approximately 125 basis points for the full year, while reducing operating margins by around 50 basis points.Fortinet Corporate Events
Executive/Board ChangesBusiness Operations and StrategyFinancial Disclosures
Fortinet Announces CFO Retirement and Successor
Positive
Feb 6, 2025
Fortinet announced the upcoming retirement of its CFO, Keith Jensen, effective May 15, 2025, with plans to appoint Christiane Ohlgart as his successor. The company reported strong financial results for the fourth quarter and full year of 2024, with significant revenue growth and record operating margins, highlighting its strategic investments and leadership position in the cybersecurity industry.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.