NasdaqGS:FTNT

Stock Analysis Report

Executive Summary

Fortinet, Inc. provides broad, integrated, and automated cybersecurity solutions worldwide.

Rewards

Trading at 31.7% below its fair value

Earnings are forecast to grow 15.01% per year

Risk Analysis

No risks detected for FTNT from our risk checks.


Snowflake Analysis

Flawless balance sheet with reasonable growth potential.


Similar Companies

Share Price & News

How has Fortinet's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: FTNT has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

1.7%

FTNT

1.7%

US Software

0.5%

US Market


1 Year Return

42.4%

FTNT

42.9%

US Software

20.3%

US Market

Return vs Industry: FTNT underperformed the US Software industry which returned 43.7% over the past year.

Return vs Market: FTNT exceeded the US Market which returned 19.4% over the past year.


Shareholder returns

FTNTIndustryMarket
7 Day1.7%1.7%0.5%
30 Day1.7%8.6%2.0%
90 Day15.9%19.4%9.4%
1 Year42.4%42.4%44.4%42.9%22.8%20.3%
3 Year220.8%220.8%154.9%144.1%50.1%40.4%
5 Year248.9%248.9%223.7%200.6%73.1%54.1%

Price Volatility Vs. Market

How volatile is Fortinet's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Fortinet undervalued compared to its fair value and its price relative to the market?

31.7%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: FTNT ($119.45) is trading below our estimate of fair value ($174.87)

Significantly Below Fair Value: FTNT is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: FTNT is poor value based on its PE Ratio (62.6x) compared to the Software industry average (49.8x).

PE vs Market: FTNT is poor value based on its PE Ratio (62.6x) compared to the US market (18.3x).


Price to Earnings Growth Ratio

PEG Ratio: FTNT is poor value based on its PEG Ratio (4.2x)


Price to Book Ratio

PB vs Industry: FTNT is overvalued based on its PB Ratio (15.5x) compared to the US Software industry average (6x).


Next Steps

Future Growth

How is Fortinet forecast to perform in the next 1 to 3 years based on estimates from 26 analysts?

15.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: FTNT's forecast earnings growth (15% per year) is above the savings rate (1.7%).

Earnings vs Market: FTNT's earnings (15% per year) are forecast to grow faster than the US market (14.2% per year).

High Growth Earnings: FTNT's earnings are forecast to grow, but not significantly.

Revenue vs Market: FTNT's revenue (12.9% per year) is forecast to grow faster than the US market (7.6% per year).

High Growth Revenue: FTNT's revenue (12.9% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: FTNT's Return on Equity is forecast to be very high in 3 years time (45%).


Next Steps

Past Performance

How has Fortinet performed over the past 5 years?

66.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: FTNT has high quality earnings.

Growing Profit Margin: FTNT's current net profit margins (15.1%) are lower than last year (18.4%).


Past Earnings Growth Analysis

Earnings Trend: FTNT's earnings have grown significantly by 66.5% per year over the past 5 years.

Accelerating Growth: FTNT's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: FTNT had negative earnings growth (-1.7%) over the past year, making it difficult to compare to the Software industry average (18.4%).


Return on Equity

High ROE: FTNT's Return on Equity (24.7%) is considered high.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Fortinet's financial position?


Financial Position Analysis

Short Term Liabilities: FTNT's short term assets ($2.8B) exceed its short term liabilities ($1.5B).

Long Term Liabilities: FTNT's short term assets ($2.8B) exceed its long term liabilities ($1.1B).


Debt to Equity History and Analysis

Debt Level: FTNT is debt free.

Reducing Debt: FTNT has not had any debt for past 5 years.

Debt Coverage: FTNT has no debt, therefore it does not need to be covered by operating cash flow.

Interest Coverage: FTNT has no debt, therefore coverage of interest payments is not a concern.


Balance Sheet

Inventory Level: FTNT has a low level of unsold assets or inventory.

Debt Coverage by Assets: FTNT's debt is not covered by short term assets (assets are -66.6x debt).


Next Steps

Dividend

What is Fortinet's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

companyn/amarketbottom25%1.4%markettop25%3.7%industryaverage1.1%forecastin3Years0%

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate FTNT's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate FTNT's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if FTNT's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if FTNT's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of FTNT's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

2.5yrs

Average management tenure


CEO

Ken Xie (56yo)

19.3yrs

Tenure

US$6,761,686

Compensation

Mr. Ken Xie founded Fortinet Inc., October 2000 and has been its Chief Executive Officer and Director since October 2000. Mr. Xie serves as an Advisor at WI Harper Group. He is a Strategic Advisor at Tride ...


CEO Compensation Analysis

Compensation vs Market: Ken's total compensation ($USD6.76M) is below average for companies of similar size in the US market ($USD10.78M).

Compensation vs Earnings: Ken's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Ken Xie
Founder19.3yrsUS$6.76m7.33% $1.5b
Michael Xie
Founder19yrsUS$3.47m6.9% $1.4b
Keith Jensen
CFO & Chief Accounting Officer2yrsUS$2.26m0.0043% $878.6k
John Whittle
Executive VP of Corporate Development & Strategic Alliances13.3yrsUS$2.40m0.00074% $150.9k
Peter Salkowski
Vice President of Investor Relations2yrsno datano data
Patrice Perche
Senior Executive Vice President of Worldwide Sales & Support4.1yrsno datano data
John Maddison
Chief Marketing Officer & Executive VP of Products1.1yrsno datano data
Laurie Buzzell
Senior Vice President of Global Human Resources1.1yrsno datano data
Sandra Wheatley
Senior Vice President of Marketing1.1yrsno datano data
Philip Quade
Chief Information Security Officer3.1yrsno datano data

2.5yrs

Average Tenure

53yo

Average Age

Experienced Management: FTNT's management team is considered experienced (2.5 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Ken Xie
Founder19.3yrsUS$6.76m7.33% $1.5b
Michael Xie
Founder19yrsUS$3.47m6.9% $1.4b
William Neukom
Lead Independent Director1.8yrsUS$347.88k0.030% $6.2m
Christopher Paisley
Independent Director16yrsUS$357.70k0.044% $9.1m
Ming Hsieh
Independent Director6.8yrsUS$336.03k0.0031% $621.8k
Gary Locke
Independent Director4.4yrsUS$335.52k0.018% $3.6m
Judith Sim
Independent Director4.7yrsUS$333.27k0.013% $2.7m
Jean Hu
Director0.3yrsno datano data

5.8yrs

Average Tenure

59.5yo

Average Age

Experienced Board: FTNT's board of directors are considered experienced (5.8 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Fortinet, Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Fortinet, Inc.
  • Ticker: FTNT
  • Exchange: NasdaqGS
  • Founded: 2000
  • Industry: Systems Software
  • Sector: Software
  • Market Cap: US$20.386b
  • Shares outstanding: 171.03m
  • Website: https://www.fortinet.com

Number of Employees


Location

  • Fortinet, Inc.
  • 899 Kifer Road
  • Sunnyvale
  • California
  • 94086
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
FTNTNasdaqGS (Nasdaq Global Select)YesCommon StockUSUSDNov 2009
FO8DB (Deutsche Boerse AG)YesCommon StockDEEURNov 2009
0IR9LSE (London Stock Exchange)YesCommon StockGBUSDNov 2009
FTNT *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNNov 2009
F1TN34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH 2 REPR 1 SHS UNSPONBRBRLJan 2020

Biography

Fortinet, Inc. provides broad, integrated, and automated cybersecurity solutions worldwide. 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; FortiSandbox technology that delivers proactive detection and mitigation services; and FortiSIEM family of software solutions, which offers a cloud-ready security information and event management solutions. The company also provides FortiSwitch product family that offers secure switching solutions for connecting customers end devices, such as computers and laptops, as well as an expanding field of Internet of things devices; FortiAnalyzer product family, which provides centralized network logging, analyzing, and reporting solutions; and FortiManager product family that provides central and scalable management solution for its FortiGate products, including software updates, configuration, policy settings, and security updates, as well as FortiAP product family, which provides secure wireless networking solutions. In addition, it provides security subscription, technical support, professional, and training services. The company sells its security solutions to channel partners; and directly to end-customers, including small and medium-sized businesses, large enterprises, and government organizations in a range of industries consisting of telecommunications, technology, government, financial services, education, retail, manufacturing, and healthcare. Fortinet, Inc. provides its products and services in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company was founded in 2000 and is headquartered in Sunnyvale, California. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/19 01:12
End of Day Share Price2020/02/18 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.