Fortinet’s Stock Shines: What Investors Need to Know
Have you noticed Fortinet (FTNT) shares lately? The stock has gained 0.9% over the past month and recently hit a new 52-week high of $101. So far this year, Fortinet has risen 3.7%, contrasting the 36.5% growth of the Zacks Computer and Technology sector and the 39.6% increase in the Zacks Internet – Software industry.
What’s Driving Fortinet’s Growth?
Fortinet has a strong history of beating earnings expectations, successfully meeting consensus estimates in all four of its previous quarters. In its latest earnings report on November 7, 2024, the company reported earnings per share (EPS) of $0.63, surpassing the anticipated $0.51.
For the current fiscal year, analysts expect Fortinet to earn $2.36 per share with total revenues of $5.89 billion. Looking ahead to the next fiscal year, earnings are projected to reach $2.63 per share, supported by revenue of $6.61 billion, which marks a year-over-year growth of 5.85% and 12.18%, respectively.
Evaluating Valuation Metrics
Even though Fortinet is trading at a 52-week high, it’s essential to assess what might lie ahead for the stock by examining its valuation metrics.
Zacks Style Scores provide a useful framework for investors to evaluate stocks beyond the Zacks Rank. The scores range from A to F in categories such as Value, Growth, and Momentum, with a combined VGM Score also available. This system helps investors find stocks that align with their investment strategies.
Currently, Fortinet has a Value Score of D, while its Growth score stands at A and its Momentum score is B. Altogether, these figures yield a VGM Score of B.
When assessing value, Fortinet trades at 41.5 times current fiscal year EPS estimates, considerably higher than the industry average of 29.7 times. On a trailing cash flow basis, it stands at 49.9 times compared to the peer group average of 29.4 times. Additionally, with a PEG ratio of 2.27, it does not rank among the most attractive stocks based on value alone.
Fortinet’s Zacks Rank
Understanding Fortinet’s Zacks Rank is crucial since it often holds more weight than style scores. Fortinet carries a favorable Zacks Rank of #2 (Buy), driven by rising earnings estimates.
Investors are encouraged to consider stocks with a Zacks Rank of 1 (Strong Buy) or 2 (Buy) alongside Style Scores of A or B. It appears Fortinet meets these criteria, suggesting the shares may continue their upward trajectory.
How Fortinet Compares to Competitors
While Fortinet’s stock performance is notable, it’s important to compare it to its industry rivals. One such peer is Meta Platforms, Inc. (META), which also enjoys a Zacks Rank of #2 (Buy) with a Value Score of C, but impressive Growth and Momentum Scores of A.
Last quarter, Meta Platforms, Inc. significantly beat earnings expectations by 16.18%. For the current fiscal year, it’s expected to generate EPS of $25.21 on revenue of $163.09 billion.
Over the last month, shares of Meta Platforms, Inc. have increased by 2.7%, currently trading at a forward P/E of 25 times and a P/CF of 31.96 times.
Notably, the Internet – Software industry ranks in the top 8% among all industries, presenting favorable conditions for both Fortinet and Meta to thrive further.
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Fortinet, Inc. (FTNT) : Free Stock Analysis Report
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The views and opinions expressed herein are the author’s and do not necessarily reflect those of Nasdaq, Inc.
