Reassessing Fortinet (FTNT) Stock – Is Wall Street Underestimating its Potential?

Fortinet may be undervalued with strong growth indicators, but the 37 analysts following the company give it an rating of hold. Their target prices range from $62.0 to $105.0 per share, for an average of $78.18. At today's price of $92.04, Fortinet is trading 17.73% away from its average target price, suggesting there is an analyst belief that shares are overpriced for the stock.

Fortinet, Inc. provides cybersecurity and convergence of networking and security solutions worldwide. Based in Sunnyvale, CA, the Large-Cap Technology company has 13,568 full time employees. Fortinet has not offered a regular dividend during the last year.

Fortinet has a trailing twelve month P/E ratio of 46.3, compared to an average of 30.01 for the Technology sector. Considering its EPS guidance of $2.25, the company has a forward P/E ratio of 40.9.

Furthermore, Fortinet is overpriced compared to its book value, since its P/B ratio of 77.54 is higher than the sector average of 3.91.

2018 2019 2020 2021 2022 2023
Revenue (M) $1,127 $2,163 $2,594 $3,342 $4,417 $5,305
Gross Margins n/a 77.0% 78.0% 77.0% 75.0% 77.0%
Net Margins 30% 15% 19% 18% 19% 22%
Net Income (M) $335 $332 $488 $607 $857 $1,148
Net Interest Expense (M) -$7 -$8 -$8 $15 $18 $21
Depreciation & Amort. (M) $56 $62 $69 $84 $104 $113
Diluted Shares (M) 871 875 838 835 805 788
Earnings Per Share $0.38 $0.38 $0.58 $0.73 $1.06 $1.46
EPS Growth n/a 0.0% 52.63% 25.86% 45.21% 37.74%
Avg. Price $13.05 $16.88 $24.43 $50.01 $60.75 $92.04
P/E Ratio 32.62 43.28 42.86 67.58 56.78 63.04
Free Cash Flow (M) $586 $716 $958 $1,204 $1,449 $1,731
CAPEX (M) $53 $92 $126 $296 $281 $204
Current Ratio 1.77 1.9 1.5 1.55 1.24 1.19
The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.

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