Strong Market Demand
High Profit Margins
Strong Liquidity Position
Low Debt Levels
🏆 Strong Competitive Position
💡 Innovation and Technology Leadership
📈 Strong Financial Performance
🚀 Growth Opportunities in SaaS
🔄 Refresh Cycle Potential
🌍 Expansion in Emerging Markets
High Valuation Ratios
Low Return on Equity
Limited Cash Reserves
⚠️ Exposure to Economic Factors
🔍 Caution in Billings Guidance
Overall, Fortinet demonstrates strong business quality with competitive advantages and solid financial performance. Future growth prospects are promising, particularly in SaaS and new customer acquisitions, despite some economic uncertainties that may impact short-term billing growth.
Analysis Date: February 6, 2025
Last Updated: March 12, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$87.66
Current Market Price: $84.98
IV/P Ratio: 1.03x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
3.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for FTNT
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (37.21)
P/B ratio ≤ 1.5 (43.47)
Current ratio ≥ 2.0 (1.47x)
Long-term debt < Net current assets (0.52x)
Margin of safety (3.0%)
FTNT does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
FTNT showcases strong profitability with a net profit margin of 29.30%, indicating effective cost management and a solid business model.
The return on equity (ROE) is only 2.73%, which suggests that the company is not generating high returns on its shareholders' investments, raising concerns about management efficiency.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
273.48%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
5.39%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
80.56%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
29.30%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
With a current ratio of 1.47 and a quick ratio of 1.39, FTNT shows strong liquidity, indicating that it can easily cover short-term liabilities.
The debt-to-equity ratio of 0.67 and debt-to-assets ratio of 0.10 reflect a conservative capital structure, suggesting low financial risk.
The cash ratio of 0.71 indicates that while FTNT has some liquidity, it may not have sufficient cash reserves to cover all short-term obligations without liquidating other assets.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.67x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
1.47x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
Fortinet holds a leading position in the secure networking market, securing over half of all global firewalls. The company is recognized for its unique single operating system approach, which integrates various security functions, giving it a competitive edge over others.
The introduction of AI-driven security and the acquisition of companies like Perception Point showcases Fortinet's commitment to innovation. Its proprietary ASIC technology enhances performance and efficiency, providing significant advantages in security operations.
Fortinet reported a total revenue growth of 17% and product revenue growth of 18%, the highest in six quarters. This reflects robust demand for its security solutions, particularly in unified SaaS and SecOps.
The company acknowledged potential impacts from tariffs and a challenging macroeconomic environment, particularly affecting its multinational operations and customer demand.
Fortinet's unified SaaS solutions are gaining traction, with a 96% growth in ARR for Security Service Edge (SSE). The company is well-positioned to capitalize on the increasing demand for integrated security solutions.
The upcoming end-of-life refresh cycle presents a significant upsell opportunity for Fortinet, especially among large enterprises currently using legacy systems. This is expected to drive substantial revenue growth.
Fortinet's performance in emerging markets, particularly in EMEA, shows strong potential for growth, driven by increasing demand for security solutions. The company is also leveraging its strong channel partnerships to penetrate these markets.
The guidance for billings growth appears cautious, reflecting potential uncertainties in economic conditions and tariff impacts, which may hinder more aggressive growth targets.