NEW YORK ( TheStreet) -- Fortinet (Nasdaq: FTNT) has been upgraded by TheStreet Ratings from hold to buy. 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, solid stock price performance, increase in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 4.0%. Since the same quarter one year prior, revenues rose by 37.0%. 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 1.85, which demonstrates the ability of the company to cover short-term liquidity needs.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 56.52% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, FTNT should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Software industry average. The net income increased by 27.8% when compared to the same quarter one year prior, rising from $14.02 million to $17.92 million.
- Net operating cash flow has increased to $36.04 million or 11.94% when compared to the same quarter last year. In addition, FORTINET INC has also modestly surpassed the industry average cash flow growth rate of 9.69%.