Fortinet (FTNT) AI Stock Analysis

• Market Cap: $80.05B
• Dividend Yield: N/A
• Average Volume (3M): 5.77M
• Price to Earnings (P/E): 43.0
• Beta (1Y): 1.31
• Revenue Growth: 13.83%
• EPS Growth: 58.13%
• Country: US
• Employees: 14,556
• Sector: Technology
• Sector Strength: 76
• Industry: Software - Infrastructure
• EPS (TTM): 0.58
• Shares Outstanding: 765,416,440
• 10 Day Avg. Volume: 6,433,817
• 30 Day Avg. Volume: 5,771,469
• PEG Ratio: 3.07
• Price to Book (P/B): 49.99
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 39.86
• Enterprise Value/Market Cap: 0.91
• Enterprise Value/Revenue: 3.23
• Enterprise Value/Gross Profit: 15.22
• Enterprise Value/Ebitda: 10.46
• 1Y Price Target: $106.92
• Price Target Upside: 2.23% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 28

Fortinet's strong financial performance and positive earnings guidance are major strengths, supported by robust profitability and operational efficiency. However, concerns about macroeconomic challenges and a high P/E ratio slightly dampen the overall outlook. The stock demonstrates moderate technical strength, but valuation concerns and external risks should be monitored.

Positive Factors

Customer Base

FTNT has approximately 77% of the Fortune 100 companies and 71% of the Global 2000 companies as customers.

Financial Performance

Record 1Q operating margin of 34.2% bested Street's 30.6% estimate and EPS of $0.58 exceeded Street's.

Product Development

FTNT continues to benefit from a refresh cycle as well as a shift to hybrid platforms as profitability.

Negative Factors

Guidance and Expectations

Revenue guidance for the second quarter was below consensus despite mounting expectations for Fortinet’s firewall refresh cycle to materialize.

Market Confidence

The stock is trading lower after hours as investor confidence over the timing and magnitude of the refresh cycle is likely shaken.

Revenue Dependency

One distributor accounted for 27% of FTNT's total revenue in Q1, indicating a potential risk due to high dependency on a single distributor.

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 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 with high gross and net profit margins. Revenue growth is robust, and operational efficiency is reflected in solid EBIT and EBITDA margins. Cash flow generation is efficient, though the balance sheet has improved from past challenges with negative equity.

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.

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.

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.

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

• Technical Analysis Sentiment: Positive
• Last Price: 104.59
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• 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 Positive. The current price of 104.59 is above the 20-day moving average (MA) of 102.14, above the 50-day MA of 98.75, and above the 200-day MA of 90.89, indicating a bullish trend. The MACD of 1.34 indicates Positive momentum. The RSI at 55.26 is Neutral, neither overbought nor oversold. The STOCH value of 64.76 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FTNT.

Fortinet Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CHKP	82 Outperform	$23.70B	28.88	30.92%	―	6.40%	6.49%
FTNT	80 Outperform	$80.05B	43.05	205.91%	―	13.83%	58.13%
CRWD	76 Outperform	$109.41B	721.64	-0.69%	―	29.39%	-119.62%
PANW	74 Outperform	$127.77B	109.02	23.38%	―	13.86%	-46.44%
ZS	74 Outperform	$38.91B	―	-1.21%	―	27.77%	89.39%
CYBR	72 Outperform	$17.56B	1,777.39	-5.36%	―	35.12%	-191.84%
Sector *	60 Neutral	$11.59B	10.39	-7.23%	2.94%	7.46%	-10.76%

Fortinet Corporate Events

Fortinet Announces CFO Retirement and Successor

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.