Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model. 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, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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- The revenue growth came in higher than the industry average of 3.2%. Since the same quarter one year prior, revenues rose by 17.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in 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 1.56, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has increased to $40.77 million or 13.12% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -2.35%.
- FORTINET INC's earnings per share declined by 9.1% 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 increased its bottom line by earning $0.39 versus $0.27 in the prior year. This year, the market expects an improvement in earnings ($0.51 versus $0.39).
- The gross profit margin for FORTINET INC is currently very high, coming in at 74.50%. Regardless of FTNT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, FTNT's net profit margin of 12.60% is significantly lower than the same period one year prior.
-- Written by a member of TheStreet Ratings Staff