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Fortinet NasdaqGS:FTNT Stock Report

Last Price


Market Cap







11 Aug, 2022


Company Financials +
FTNT fundamental analysis
Snowflake Score
Future Growth4/6
Past Performance3/6
Financial Health2/6

FTNT Stock Overview

Fortinet, Inc. provides broad, integrated, and automated cybersecurity solutions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.

Fortinet Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Fortinet
Historical stock prices
Current Share PriceUS$52.52
52 Week HighUS$74.35
52 Week LowUS$48.73
1 Month Change-11.91%
3 Month Change-6.73%
1 Year Change-14.09%
3 Year Change227.84%
5 Year Change619.06%
Change since IPO3,060.05%

Recent News & Updates

Aug 01

Fortinet: Evaluating The Prospects Amid Steepening Valuation

Fortinet has developed a centralized cybersecurity management plane while being at the forefront in the cybersecurity sector with its software-defined wide-area networking offerings. The company has a robust ecosystem and its customers experience high switching costs. In this article, we will share our thoughts on the company's future, the outlook for operating margins, and the current valuation level. This article was prepared by Eranda Kalhara, CFA in collaboration with Dilantha De Silva. Fortinet, Inc. (FTNT), a provider of network security appliances and Unified Threat Management network security solutions, has developed a centralized cybersecurity management plane while being at the forefront in the cybersecurity sector with its software-defined wide-area networking offerings with a global client base. Fortinet Security Fabric, cloud and Software-defined Wide Area Network (SD-WAN) offerings have been hailed by the users as a user-friendly system covering various security concerns. With higher spending on IT infrastructure development during the pandemic period combined with continuous deal wins, Fortinet witnessed significant revenue growth in 2020 and 2021, and this led to surging stock prices as well (FTNT stock is up 710% in the last 5 years). With intensifying competition in the cybersecurity sector with substantial investments required to be in the game amid low traction on the work-from-home concept, the question is whether Fortinet will be able to expect the same growth momentum in the future. In this article, we will try to answer this important question. Making The Most of The Global Distribution Network During the pandemic, the normal business operations of many companies were affected. The pandemic expedited slow-paced digital transformations with a huge disruption of the normal workload. Many employees were required to log in to company networks through personal networks to access sensitive information, and this unexpected, unforeseen development exposed confidential data to potential attackers. While cybersecurity may have been seen as a nice-to-have luxury or a reactive measure put in place if something goes wrong, the disruption caused by the pandemic propelled cyber security to be recognized as a necessity for companies of every size and scale where the constantly evolving array of cyberattacks require the latest protection measures. Gartner estimates that spending on information security will total $172 billion in 2022. This spike is putting pressure on security teams to deliver more for every dollar invested. A survey conducted by Deloitte noted an increase in cybersecurity spending, with identity and access management, cyber monitoring and operations, and endpoint network security receiving bigger shares of the pie. Exhibit 1: Budget allocation across cybersecurity domains Deloitte With the expected global economic slowdown, many companies will likely be taking a hard look at whether they need to cut expenses across the board. However, with the growing trend of companies having to deal with protecting sensitive data, applications, and users across on-premises and remote sites, public clouds, private clouds, and edge locations combined with the rising number of legal and social standards on cybersecurity will likely lead to robust long-term demand for cybersecurity solutions. Fortinet is well positioned to benefit from this increase in global cybersecurity spending with a network of more than 20,000 channel partners worldwide, including distributors, resellers, value-added resellers, and managed service providers. In our opinion, the partner ecosystem supports Fortinet to penetrate smaller economies (the partner may provide value-added services including but not limited to customer onboarding services, post-customer acquisition services, maintenance, and updates). The company caters to more than 450,000 customers worldwide including most of the Fortune 100 companies. Robust Ecosystem With High Switching Costs In the tech space, especially in the ERP and cybersecurity sectors, the ecosystem around the products of a company matters a lot as it will support end users to become familiar with one developer, in return enjoying the ability to use the shared information with the developer in multiple locations. According to McKinsey, the bigger the ecosystem (in the sense of the number of different applications and ease of use, and the number of approved third-party vendors) the more likely the product is to attract and retain clients. As Fortinet’s firewall and UTM portfolio evolved to meet the higher demands of enterprises and service providers, Fortinet also expanded its offerings to include security products for networking, switching, sandboxing, security information, event management, and virtual instances. These different products are unified through the security fabric of Fortinet operating as a centralized management plane for a network's security products. In addition to the above, Fortinet has expanded its business to cloud security, endpoint security, identity and access, and IoT security, providing a more vibrant ecosystem where existing and potential clients have the freedom to expand their operations without changing vendors. Fortinet has also become a leading player in the software-defined wide-area networking, or SD-WAN market, which is rapidly growing as companies move away from routers with expensive connections rented from telcos to SD-WAN which directly connects users to their requests via generic Internet connections. Today, there are only limited operators providing the same services in the SD-WAN market where the expected growth is expected to grow mid-double digits. Exhibit 2: Fortinet's SD-WAN segment stats Company presentation Source: Company presentation Considering the deep root connections of the security component of the overall cybersecurity system of any given product and heavy costs in implementing a new cybersecurity solution while maintaining the existing defense solutions, we believe leading cybersecurity companies can benefit from switching costs. In addition, the learning curve in getting used to a new system combined with potential operational disruption will further increase the switching costs. Despite the growth of network cybersecurity solutions which are sold as virtual and as-a-service offerings that reduce the burden of installing security appliances on-premises, we believe that switching costs will remain high, providing more leverage to established companies such as Fortinet. The company has established customer switching costs alongside its ability to upsell and cross-sell products to the existing customer base and has a nice runway for growth through its holistic approach to network and cloud cybersecurity. Strategic Acquisitions to Fuel Market and Product Expansions Fortinet has identified its limitations and the substantial investments required to maintain organic growth, and the company is focused on acquiring smaller peers that could add value to its ecosystem in the long run. This is a strategy that we believe will help Fortinet maintain the stellar growth rates seen in the last few years. Overall, Fortinet has closed 17 deals with the most recent acquisition being on Jul 7, 2021. The acquisition of AccelOps helped the company in correlating visibility and threat intelligence to its entire network security ecosystem and simultaneously has extended it to third-party vendor solutions. Intending to expand the cloud services as well as its solution portfolio, Fortinet acquired Meru Networks while the acquisitions of Coyote Point and XDN have not only helped it broaden the product offerings but also the customer base and geographic reach. Exhibit 3: Fortinet's notable acquisitions Tracxn Source: Tracxn The acquisition of, a privately held startup, will help the company accelerate its penetration of the DevSecOps market and the acquisition of ShieldX will enable the company to gain a more comprehensive view of end users, workstations, and OT devices. These strategic acquisitions support the hypothesis that the company is seeking tuck-in acquisitions to increase its capabilities in areas such as cloud-based security technologies, Machine Learning, and automation. The Growing Subscription Base and Continued Deal Wins Fortinet provides subscription-based services. The continuous revenue stream resulting from the addition of new customers and the steady subscription revenue will support the company in generating stable revenue while leaving room for margin expansion through repeat revenue from a single customer which increases the customer lifetime value. Subscription-based service is a high gross margin business (approximately 80%) compared with the hardware-centric model. The high attach rate of subscription-based services, including technical support and the latest threat prevention updates, have helped spur billings growth (revenue plus the change in deferred revenue) and provide recurring revenue streams to the company. We have to appreciate the efforts of the management to increase the customer base which has rippling effects on the growth of subscription-based revenue. We believe that this strategy will continue to improve the company’s top and bottom-line performances with subscription revenue remaining a larger portion of overall revenue compared with products. In Q1, security subscription services revenue was up 23% to $313 million]. Fortinet has become a globally recognized brand with a customer base of over 450,000. This vast customer base presents the company with an opportunity to upsell products within its installed user base. Fortinet’s count of deals worth at least $500,000 grew from 425 in 2018 to 639 in 2020 (and 602 through the first three quarters of 2021) and 41% of 2021 FortiGate firewall billings came from high-end solutions versus 51% from midrange and 27% from entry-level. Management expects bookings in the range of $1.325 billion to $1.385 billion for the second quarter of this year, which at the midpoint represents bookings growth of 40%. The company derives a significant portion of total sales from its top 10 biggest distributors, of which Exclusive Networks Group has the highest share and accounted for 31% of 2021 total revenue followed by Ingram Micro’s 12%. Substantial Investments to Support Growth With the increasing popularity of the working from home concept opening the corporate infrastructure to more spam and malicious attacks combined with growing complexities requested and expected by clients, every cybersecurity company must continuously invest in broadening its capabilities to survive in this highly competitive market. Over the last few years, Fortinet has invested heavily to enhance its sales and marketing capabilities, particularly by increasing the sales force. This has put pressure on operating margins.

Shareholder Returns

FTNTUS SoftwareUS Market

Return vs Industry: FTNT matched the US Software industry which returned -14.6% over the past year.

Return vs Market: FTNT underperformed the US Market which returned -11.6% over the past year.

Price Volatility

Is FTNT's price volatile compared to industry and market?
FTNT volatility
FTNT Average Weekly Movement8.1%
Software Industry Average Movement10.5%
Market Average Movement7.8%
10% most volatile stocks in US Market16.9%
10% least volatile stocks in US Market3.2%

Stable Share Price: FTNT is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 8% a week.

Volatility Over Time: FTNT's weekly volatility (8%) has been stable over the past year.

About the Company

200011,508Ken Xie

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.

Fortinet Fundamentals Summary

How do Fortinet's earnings and revenue compare to its market cap?
FTNT fundamental statistics
Market CapUS$41.41b
Earnings (TTM)US$674.00m
Revenue (TTM)US$3.82b


P/E Ratio


P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
FTNT income statement (TTM)
Cost of RevenueUS$944.10m
Gross ProfitUS$2.87b
Other ExpensesUS$2.20b

Last Reported Earnings

Jun 30, 2022

Next Earnings Date


Earnings per share (EPS)0.85
Gross Margin75.26%
Net Profit Margin17.66%
Debt/Equity Ratio-260.6%

How did FTNT perform over the long term?

See historical performance and comparison
We’ve recently updated our valuation analysis.


Is FTNT undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score


Valuation Score 3/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for FTNT?

Other financial metrics that can be useful for relative valuation.

FTNT key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue10.7x
Enterprise Value/EBITDA49.5x
PEG Ratio3.3x

Price to Earnings Ratio vs Peers

How does FTNT's PE Ratio compare to its peers?

FTNT PE Ratio vs Peers
The above table shows the PE ratio for FTNT vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average24.2x
VMW VMware
CHKP Check Point Software Technologies
NLOK NortonLifeLock
ORCL Oracle
FTNT Fortinet

Price-To-Earnings vs Peers: FTNT is expensive based on its Price-To-Earnings Ratio (61.4x) compared to the peer average (24.2x).

Price to Earnings Ratio vs Industry

How does FTNT's PE Ratio compare vs other companies in the US Software Industry?

Price-To-Earnings vs Industry: FTNT is expensive based on its Price-To-Earnings Ratio (61.4x) compared to the US Software industry average (45.7x)

Price to Earnings Ratio vs Fair Ratio

What is FTNT's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

FTNT PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio61.4x
Fair PE Ratio41.4x

Price-To-Earnings vs Fair Ratio: FTNT is expensive based on its Price-To-Earnings Ratio (61.4x) compared to the estimated Fair Price-To-Earnings Ratio (41.4x).

Share Price vs Fair Value

What is the Fair Price of FTNT when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: FTNT ($52.52) is trading below our estimate of fair value ($103.77)

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

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.

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Future Growth

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

Future Growth Score


Future Growth Score 4/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: FTNT's forecast earnings growth (18.7% per year) is above the savings rate (1.9%).

Earnings vs Market: FTNT's earnings (18.7% per year) are forecast to grow faster than the US market (14.5% per year).

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

Revenue vs Market: FTNT's revenue (18.5% per year) is forecast to grow faster than the US market (8% per year).

High Growth Revenue: FTNT's revenue (18.5% 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 (122.6%).

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Past Performance

How has Fortinet performed over the past 5 years?

Past Performance Score


Past Performance Score 3/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: FTNT has high quality earnings.

Growing Profit Margin: FTNT's current net profit margins (17.7%) are lower than last year (17.7%).

Past Earnings Growth Analysis

Earnings Trend: FTNT's earnings have grown significantly by 35.9% per year over the past 5 years.

Accelerating Growth: FTNT's earnings growth over the past year (30.9%) is below its 5-year average (35.9% per year).

Earnings vs Industry: FTNT earnings growth over the past year (30.9%) exceeded the Software industry 18.3%.

Return on Equity

High ROE: FTNT's liabilities exceed its assets, so it is difficult to calculate its Return on Equity.

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Financial Health

How is Fortinet's financial position?

Financial Health Score


Financial Health Score 2/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: FTNT has negative shareholder equity, which is a more serious situation than short term assets not covering short term liabilities.

Long Term Liabilities: FTNT has negative shareholder equity, which is a more serious situation than short term assets not covering long term liabilities.

Debt to Equity History and Analysis

Debt Level: FTNT has negative shareholder equity, which is a more serious situation than a high debt level.

Reducing Debt: FTNT's has negative shareholder equity, so we do not need to check if its debt has reduced over time.

Debt Coverage: FTNT's debt is well covered by operating cash flow (150.1%).

Interest Coverage: FTNT's interest payments on its debt are well covered by EBIT (59.3x coverage).

Balance Sheet

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

Dividend Score


Dividend Score 0/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage

Dividend Yield vs Market

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

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

Earnings Payout to Shareholders

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

Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as FTNT has not reported any payouts.

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


Average management tenure


Ken Xie (59 yo)





Mr. Ken Xie has been Founder, Chief Executive Officer and Director at Fortinet, Inc. since October 2000. Mr. Xie serves as an Advisor at WI Harper Group. He serves as an Advisor at ForgePoint Capital Manag...

CEO Compensation Analysis

Compensation vs Market: Ken's total compensation ($USD14.20M) is about average for companies of similar size in the US market ($USD12.88M).

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

Leadership Team

Experienced Management: FTNT's management team is considered experienced (4.5 years average tenure).

Board Members

Experienced Board: FTNT's board of directors are not considered experienced ( 2.3 years average tenure), which suggests a new board.


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 employee growth, exchange listings and data sources

Key Information

  • Name: Fortinet, Inc.
  • Ticker: FTNT
  • Exchange: NasdaqGS
  • Founded: 2000
  • Industry: Systems Software
  • Sector: Software
  • Implied Market Cap: US$41.413b
  • Shares outstanding: 788.52m
  • Website:

Number of Employees


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


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/11 00:00
End of Day Share Price2022/08/11 00:00
Annual Earnings2021/12/31

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.