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"We rate FORTINET INC (FTNT) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 9.0%. Since the same quarter one year prior, revenues rose by 26.3%. 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 1.82, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for FORTINET INC is currently very high, coming in at 73.16%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, FTNT's net profit margin of 3.04% significantly trails the industry average.
- Compared to its closing price of one year ago, FTNT's share price has jumped by 42.72%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- FORTINET INC's earnings per share declined by 42.9% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over 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 ($0.59 versus $0.15).
- You can view the full analysis from the report here: FTNT Ratings Report
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