Fortinet Inc (FTNT, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $104.27, Fortinet Inc has witnessed a daily gain of 0.8%, marked against a three-month change of 8.47%. A thorough analysis, underlined by the GF Score, suggests that Fortinet Inc is well-positioned for substantial growth in the near future.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 8/10
- Profitability rank: 10/10
- Growth rank: 10/10
- GF Value rank: 6/10
- Momentum rank: 6/10
Each one of these components is ranked and the ranks also have positive correlation with the long-term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. GuruFocus assigned Fortinet Inc the GF Score of 96 out of 100, which signals the highest outperformance potential.
Understanding Fortinet Inc's Business
Fortinet Inc is a platform-based cybersecurity vendor with product offerings covering network security, cloud security, zero-trust access, and security operations. The firm derives a majority of its revenue through sales of its subscriptions and support-based business. The California-based firm has more than 800,000 customers across the world. With a market cap of $79.81 billion and sales amounting to $6.14 billion, Fortinet Inc boasts an operating margin of 31.52%, reflecting its efficient business operations.
Financial Strength Breakdown
According to the Financial Strength rating, Fortinet Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for Fortinet Inc stands impressively at 97.78, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5.
With an Altman Z-Score of 7.17, Fortinet Inc exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.16, Fortinet Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Fortinet Inc's impressive standing among its peers in generating profit. Fortinet Inc's Operating Margin has increased by 47.72% over the past five years, as shown by the following data: 2020: 20.50; 2021: 19.46; 2022: 21.95; 2023: 23.40; 2024: 30.28.
Furthermore, Fortinet Inc's Gross Margin has seen a consistent rise over the past five years, as evidenced by the data: 2020: 78.03; 2021: 76.57; 2022: 75.44; 2023: 76.68; 2024: 80.56. This trend underscores the company's growing proficiency in transforming revenue into profit. The Piotroski F-Score confirms Fortinet Inc's solid financial situation based on Joseph Piotroski's nine-point scale, which measures a company's profitability, funding, and operating efficiency.
Fortinet Inc's strong Predictability Rank of 5.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Fortinet Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 24.5%, which outperforms better than 83.58% of 2,515 companies in the Software industry.
Moreover, Fortinet Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 48.5, and the rate over the past five years is 40.2. This trend accentuates the company's continued capability to drive growth.
Conclusion: Fortinet Inc's Path to Outperformance
Fortinet Inc's financial strength, profitability, and growth metrics, as highlighted by the GF Score, underscore the firm's unparalleled position for potential outperformance. The company's strategic initiatives, robust financial health, and consistent growth trajectory make it a compelling choice for value investors seeking long-term gains. As the cybersecurity landscape continues to evolve, Fortinet Inc's innovative solutions and strong market presence position it well for future success.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
