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 62.11, Fortinet Inc has witnessed a decline of 0.2% over a period, marked against a three-month change of -7.29%. A thorough analysis, underlined by the GuruFocus Score Rating, suggests that Fortinet Inc is well-positioned for substantial growth in the near future.
Decoding 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.
Fortinet Inc's GF Score components are as follows:
- 1. Financial strength rank: 7/10
- 2. Profitability rank: 9/10
- 3. Growth rank: 10/10
- 4. GF Value rank: 9/10
- 5. 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. With a high growth rank and a slightly lower momentum rank, 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, with a market cap of $48.77 billion and sales of $4.99 billion, 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 500,000 customers across the world. With an operating margin of 23.5%, Fortinet Inc demonstrates a strong profitability potential.
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 61.06, underscoring its strong capability to cover its interest obligations. With an Altman Z-Score of 5.33, Fortinet Inc exhibits a strong defense against financial distress. With a favorable Debt-to-Revenue ratio of 0.2, 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 Operating Margin has increased (68.18%) over the past five years, as shown by the following data: 2018: 12.99; 2019: 16.23; 2020: 18.95; 2021: 19.32; 2022: 21.85. 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.
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 30.4%, which outperforms better than 84.5% of 2394 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 37.7, and the rate over the past five years is 45.4. This trend accentuates the company's continued capability to drive growth.
Conclusion
Given the company's robust financial strength, impressive profitability, and strong growth metrics, the GuruFocus Score Rating highlights Fortinet Inc's unparalleled position for potential outperformance. This analysis underscores the importance of comprehensive financial evaluation in identifying promising investment opportunities. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
