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Fortinet (NAS:FTNT) ROIC %

: 21.44% (As of Dec. 2023)
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ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Fortinet's annualized return on invested capital (ROIC %) for the quarter that ended in Dec. 2023 was 21.44%.

As of today (2024-02-21), Fortinet's WACC % is 10.65%. Fortinet's ROIC % is 21.27% (calculated using TTM income statement data). Fortinet generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.


Fortinet ROIC % Historical Data

The historical data trend for Fortinet's ROIC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Fortinet Annual Data
Trend Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
ROIC %
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 14.75 17.87 18.59 21.08 21.12

Fortinet Quarterly Data
Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23
ROIC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 30.07 20.81 20.00 22.89 21.44

Competitive Comparison

For the Software - Infrastructure subindustry, Fortinet's ROIC %, along with its competitors' market caps and ROIC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Fortinet ROIC % Distribution

For the Software industry and Technology sector, Fortinet's ROIC % distribution charts can be found below:

* The bar in red indicates where Fortinet's ROIC % falls into.



Fortinet ROIC % Calculation

Fortinet's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2023 is calculated as:

ROIC % (A: Dec. 2023 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (A: Dec. 2022 ) + Invested Capital (A: Dec. 2023 ))/ count )
=1236.5 * ( 1 - 10.78% )/( (4766.9 + 5679.3)/ 2 )
=1103.2053/5223.1
=21.12 %

where

Fortinet's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Dec. 2023 is calculated as:

ROIC % (Q: Dec. 2023 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (Q: Sep. 2023 ) + Invested Capital (Q: Dec. 2023 ))/ count )
=1536.8 * ( 1 - 22.91% )/( (5373.9 + 5679.3)/ 2 )
=1184.71912/5526.6
=21.44 %

where

Note: The Operating Income data used here is four times the quarterly (Dec. 2023) data.

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Fortinet  (NAS:FTNT) ROIC % Explanation

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.

There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.

Why is ROIC % important?

Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Fortinet's WACC % is 10.65%. Fortinet's ROIC % is 21.27% (calculated using TTM income statement data). Fortinet generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases. Fortinet earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Be Aware

Like ROE % and ROA %, ROIC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.


Fortinet ROIC % Related Terms

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Fortinet (NAS:FTNT) Business Description

Traded in Other Exchanges
Address
899 Kifer Road, Sunnyvale, CA, USA, 94086
Fortinet 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 700,000 customers across the world.
Executives
Ken Xie director, officer: President & CEO 4655 GREAT AMERICA PARKWAY - SUITE 300, SANTA CLARA CA 95054
Patrice Perche officer: Chief Revenue Off./EVP Supp. C/O FORTINET, INC., 899 KIFER ROAD, SUNNYVALE CA 94086
Michael Xie director, officer: VP, Engineering & CTO 1090 KIFER ROAD, SUNNYVALE CA 94086
William H. Neukom director C/O FORTINET, INC., 1090 KIFER ROAD, SUNNYVALE CA 94086
Keith Jensen officer: Chief Accounting Officer C/O FORTINET, INC., 899 KIFER ROAD, SUNNYVALE CA 94068
John Whittle officer: VP & General Counsel 1090 KIFER ROAD, SUNNYVALE CA 94086
James G. Stavridis director C/O NEUBERGER BERMAN MANAGEMENT LLC, 605 THIRD AVENUE, NEW YORK NY 10158-0180
Christopher B Paisley director 14870 THREE OAKS COURT, SARATOGA CA 95070
Jean X. Hu director 2485 AUGUSTINE DRIVE, SANTA CLARA CA 95054
Kelly Ducourty director C/O FORTINET, INC., 899 KIFER ROAD, SUNNYVALE CA 94086
Cohen Peter Dale Jr. director C/O FORTINET, INC., 899 KIFER ROAD, SUNNYVALE CA 94086
Ming Hsieh director 4399 SANTA ANITA AVE., EL MONTE CA 91731
Judith Sim director C/O FORTINET, INC., 899 KIFER ROAD, SUNNYVALE CA 94086
Del Matto Andrew H officer: Chief Financial Officer 350 ELLIS STREET, MOUNTAIN VIEW CA 94043
Gary Locke director C/O FORTINET, INC., 899 KIFER ROAD, SUNNYVALE CA 94086