Fortinet (FTNT) AI Stock Analysis

• Market Cap: $58.50B
• Dividend Yield: N/A
• Average Volume (3M): 5.28M
• Price to Earnings (P/E): 32.3
• Beta (1Y): 1.30
• Revenue Growth: 14.78%
• EPS Growth: 22.52%
• Country: US
• Employees: 14,556
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 0.74
• Shares Outstanding: 743,648,130
• 10 Day Avg. Volume: 4,660,690
• 30 Day Avg. Volume: 5,276,139
• PEG Ratio: 0.75
• Price to Book (P/B): 48.35
• Price to Sales (P/S): 12.13
• P/FCF Ratio: 38.43
• Enterprise Value/Market Cap: 1.06
• Enterprise Value/Revenue: 9.44
• Enterprise Value/Gross Profit: 11.62
• Enterprise Value/Ebitda: 26.00
• 1Y Price Target: $84.22
• Price Target Upside: 7.52% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 25
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 71 Outperform
• Price Target: $89.00 ▲(13.62% Upside)

Fortinet's overall stock score reflects strong financial performance and growth prospects, supported by robust profitability and efficient operations. Technical analysis indicates a bearish trend, but the stock may be approaching oversold levels. Valuation suggests a premium price, justified by growth expectations. The absence of corporate events and the exclusion of earnings call impact the overall score.

Positive Factors

Strong Cash Generation

Fortinet's ability to generate strong cash flow supports its operational and investment activities, ensuring financial stability and growth potential.

Robust Profitability

High profitability margins indicate efficient operations and a strong competitive position, supporting long-term financial health and market leadership.

Expansion in Large Enterprise Deals

Growth in large enterprise deals enhances revenue stability and market presence, positioning Fortinet as a preferred partner for major organizations.

Negative Factors

Deceleration in Service Revenue Growth

Slowing service revenue growth may impact recurring revenue streams, challenging Fortinet's ability to sustain long-term growth momentum.

Challenges in North America

Regional growth disparities, especially in North America, could limit Fortinet's market expansion and affect overall revenue growth.

Low Equity Base

A low equity base can pose financial risks, limiting Fortinet's ability to leverage equity for growth and potentially increasing financial vulnerability.

Fortinet Business Overview & Revenue Model

Company Description

Fortinet, Inc. provides broad, integrated, and automated cybersecurity solutions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It offers FortiGate hardware and software licenses that provide various security and networking functions, including firewall, intrusion prevention, anti-malware, virtual private network, application control, web filtering, anti-spam, and wide area network acceleration. The company also provides FortiSwitch product family that offers secure switching solutions for connecting customers their end devices; FortiAP product family, which provides secure wireless networking solutions; FortiExtender, a hardware appliance; FortiAnalyzer product family, which offers centralized network logging, analyzing, and reporting solutions; and FortiManager product family that provides central and scalable management solution for its FortiGate products. It offers FortiWeb product family provides web application firewall solutions; FortiMail product family that secure email gateway solutions; FortiSandbox technology that delivers proactive detection and mitigation services; FortiClient that provides endpoint protection with pattern-based anti-malware, behavior-based exploit protection, web-filtering, and an application firewall; FortiToken and FortiAuthenticator product families for multi-factor authentication to safeguard systems, assets, and data; and FortiEDR/XDR, an endpoint protection solution that provides both comprehensive machine-learning anti-malware execution and real-time post-infection protection. It provides security subscription, technical support, professional, and training services. It sells its security solutions to channel partners and directly to various customers in telecommunications, technology, government, financial services, education, retail, manufacturing, and healthcare industries. It has strategic alliance with Linksys. Fortinet, Inc. was incorporated in 2000 and is headquartered in Sunnyvale, California.

How the Company Makes Money

Fortinet generates revenue primarily through the sale of security hardware, software licenses, and subscription services. Its key revenue streams include the sale of FortiGate firewalls and other security appliances, which provide essential network security functions. Additionally, Fortinet earns recurring revenue through subscription services for threat intelligence, security updates, and support services. The company also engages in partnerships with technology and service providers to enhance its market reach and product offerings, contributing to its earnings through joint ventures and collaborative sales efforts. Furthermore, the increasing demand for cloud security solutions and managed security services in the face of rising cyber threats has bolstered its revenue potential.

Fortinet Financial Statement Overview

Summary

Fortinet demonstrates strong financial performance with robust profitability and efficient operations. The income statement shows healthy margins and consistent revenue growth. The balance sheet indicates manageable leverage but highlights potential risks due to a low equity base. Cash flow generation remains strong, supporting financial stability and growth prospects.

Income Statement

Fortinet's income statement shows strong profitability with a TTM gross profit margin of 81.5% and a net profit margin of 30.6%. The company has demonstrated consistent revenue growth, albeit at a slower pace recently, with a TTM revenue growth rate of 3.4%. EBIT and EBITDA margins are healthy, indicating efficient operations. Overall, Fortinet's income statement reflects robust profitability and stable growth.

Balance Sheet

The balance sheet reveals a moderate debt-to-equity ratio of 0.48 in the TTM period, indicating manageable leverage. However, the company's equity ratio is low due to a relatively small stockholders' equity compared to total assets. Return on equity is exceptionally high at 120.7%, driven by strong net income, but this is partly due to the low equity base. The balance sheet shows financial stability but highlights potential risks related to equity levels.

Cash Flow

Fortinet's cash flow statement indicates strong cash generation capabilities, with a TTM operating cash flow to net income ratio of 0.50 and a free cash flow to net income ratio of 0.85. Despite a recent decline in free cash flow growth, the company maintains a solid cash flow position, supporting its operational and investment activities. Overall, the cash flow statement reflects effective cash management and operational efficiency.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	6.55B	5.96B	5.30B	4.42B	3.34B	2.59B
Gross Profit	5.33B	4.80B	4.07B	3.33B	2.56B	2.02B
EBITDA	2.38B	2.20B	1.47B	1.08B	727.70M	610.50M
Net Income	1.87B	1.75B	1.15B	857.30M	606.80M	488.50M
Balance Sheet
Total Assets	9.36B	9.76B	7.26B	6.23B	5.92B	4.04B
Cash, Cash Equivalents and Short-Term Investments	3.12B	4.07B	2.44B	2.21B	2.55B	1.84B
Total Debt	995.90M	994.30M	992.30M	990.40M	988.40M	0.00
Total Liabilities	8.63B	8.27B	7.72B	6.51B	5.12B	3.19B
Stockholders Equity	735.10M	1.49B	-463.40M	-281.60M	781.70M	856.00M
Cash Flow
Free Cash Flow	2.03B	1.88B	1.73B	1.45B	1.20B	957.80M
Operating Cash Flow	2.45B	2.26B	1.94B	1.73B	1.50B	1.08B
Investing Cash Flow	-632.70M	-727.40M	-649.30M	763.90M	-1.33B	-72.80M
Financing Cash Flow	-2.31B	-50.10M	-1.57B	-2.13B	82.80M	-1.17B

Fortinet Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 78.33
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FTNT, the sentiment is Negative. The current price of 78.33 is below the 20-day moving average (MA) of 79.88, below the 50-day MA of 81.41, and below the 200-day MA of 90.48, indicating a bearish trend. The MACD of -0.93 indicates Positive momentum. The RSI at 42.63 is Neutral, neither overbought nor oversold. The STOCH value of 38.54 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FTNT.

Fortinet Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CHKP	77 Outperform	$20.40B	20.45	34.19%	―	6.31%	25.27%
CSCO	77 Outperform	$291.91B	27.86	23.01%	2.09%	8.91%	14.53%
PANW	73 Outperform	$131.65B	121.05	15.33%	―	15.30%	-60.71%
FTNT	71 Outperform	$58.50B	32.25	228.04%	―	14.78%	22.52%
CRWD	66 Neutral	$117.73B	-370.44	-8.88%	―	22.05%	-341.24%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
ZS	60 Neutral	$34.55B	-826.39	-2.41%	―	23.24%	-8.83%