Trade-Ideas LLC identified

Fortinet

(

FTNT

) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Fortinet as such a stock due to the following factors:

  • FTNT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $91.8 million.
  • FTNT has traded 292,148 shares today.
  • FTNT is trading at 3.17 times the normal volume for the stock at this time of day.
  • FTNT is trading at a new low 5.18% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on FTNT:

Fortinet, Inc. provides cyber security solutions for enterprises, service providers, and government organizations worldwide. FTNT has a PE ratio of 278. Currently there are 16 analysts that rate Fortinet a buy, no analysts rate it a sell, and 8 rate it a hold.

The average volume for Fortinet has been 2.4 million shares per day over the past 30 days. Fortinet has a market cap of $4.8 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 0.64 and a short float of 4.4% with 1.75 days to cover. Shares are down 12.7% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Fortinet as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and increase in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and disappointing return on equity.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 16.5%. Since the same quarter one year prior, revenues rose by 34.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • FTNT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, FTNT has a quick ratio of 1.79, which demonstrates the ability of the company to cover short-term liquidity needs.
  • FORTINET INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FORTINET INC reported lower earnings of $0.15 versus $0.26 in the prior year. This year, the market expects an improvement in earnings ($0.51 versus $0.15).
  • FTNT has underperformed the S&P 500 Index, declining 14.30% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Software industry and the overall market on the basis of return on equity, FORTINET INC underperformed against that of the industry average and is significantly less than that of the S&P 500.

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