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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Fortinet, Inc. (XNAS:FTNT) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
FTNT
Name:
FORTINET, INC. (XNAS:FTNT)
Sector:
273.50M
Industry:
Software�Infrastructure
CEO:
Mr. Ken Xie
Total Employees:
11,508
Our Technological Advancement Rating
Our Rating:
B
Technological advancement compared to industry is -37.29% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF FORTINET, INC.(FTNT) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND SOFTWARE�INFRASTRUCTURE INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
48.6
One Month Price Target:
$48.93
Six Month Price Target :
$50.57
Likely Price in One Year's Time:
Ticker:
$52.54
Likely Trading Range Today Under (Normal Volatility)
$48.43
Price Upper limit ($) :
$48.94
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$45.62
This week:
$41.93
This month :
$35.27
Other Primary facts
Market Cap:
39.15B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
788.52M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
21.23%
-16.33%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$62.41
$55.95
$34.79
$41.25
Medium risk (<10%) entry points
Buy Call
Sell Call
$53.84
Buy Put:
Sell Put:
$52.46
$43.34
$44.74
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
FTNT
Sharpe Ratio:
5.27%
Comparison:
FTNT, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is 222.22% higher than the industry
& ratio is 131.13% higher than the market/S&P 500 average
Average Returns/Yield of
FTNT
Daily returns:
0.17%
Weekly returns:
0.85%
Monthly returns:
3.41%
Yearly returns:
14.38%
Comparison of returns:
Average annual returns/yield (last 3 years) is 184.63% above industry average
Classification:
FTNT, is amongst the top 20% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.59
Statistical test of Returns:
FTNT has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
3.07%
Weekly Volatility:
6.86%
Monthly Volatility:
13.73%
Yearly Volatility:
47.56%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.61%
Volatility in last five trading days has been -80.17% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-6.13%
Weekly VaR:
-13.72%
Monthly VaR:
-27.43%
How Much Can the price of
FTNT
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-22%
Worst case (decline):
>85%
This translates to price declining to:
$37.76
This translates to price declining to:
$7.29
Severe Crash Probability
Risk of crash in next 6/12 months: Very high (>70%)
What is Value at Risk (VaR)?
Risk Fundamentals
FTNT is a 93.62% riskier investment compared to the market/S&P 500 & is 65.88% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -7.86% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
FTNT
Beta in relation to market/S&P 500--1.21
Expected beta in 1 year's time:
0.743
Expected beta in 3 year's time:
1.05
Unlevered (debt free) Beta:
0.216
Beta in relation to Nasdaq (XNAS):
1.176
Beta in relation to all global stocks::
0.754
Beta Comparison & Analysis
Beta of competitors/peers::
1.385
Beta is -12.88% lower than peers
Average Industry Beta:
1.112
Beta is 8.51% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
62.00%
Sustainable growth rate is -83.22% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.295
Alpha is 716.12% above industry average alpha yield
Alpha is 1879% higher than market/& is unsustainably high
Analysis of Cost of Capital of
FTNT
Equity cost of capital:
0.114
Equity cost of capital is 6.02% above industry mean WACC
Unlevered (without debt) cost of capital:
2.04%
Before-tax cost of debt:
1.83%
After-tax cost of debt:
1.45%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
1.45%
WACC is 28.32% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$4.55
Revenue growth rate per share of (3Y):
164.33
Annual revenue growth rate is 26.52% above the industry average
EPS:
$0.77
Expected Annual growth rate of EPS (3Y):
23.87%
Expected future EPS growth rate is -20.77% lower than the Software�Infrastructure industry
Free cash flow (FCF) per share:
$1.49
-
-
Debt per share
$1.25
EBITDA per share
$0.94
Valuation Analysis Today of
FTNT
P/E Ratio:
59.6
P/E Ratio of Competitors/Peers:
704.18
P/E ratio is -91.54% lower than main peers & is -8.64% lower than the industry
Stock price/value with industry average P/E ratio: $50.23
FTNT is -3.25% undervalued if valued using industry average P/E ratio
-
-
P/S (Price to Sales ratio):
10.68
Price to sales ratio is -2.72% below the industry mean
P/B (Price to book value ratio):
164.33
Price to free cash flow: 32.63
Price to free cash flow ratio is -13.27% lower than the industry
Net income growth rate (3Y):
89.26%
Net income growth rate is -98.95% lower than the industry average net income growth rate
Dividend Analysis
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Dividend History:
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
-
In-depth Debt & Leverage Analysis
Debt to equity ratio:
454.25%
Net debt to equity ratio:
30.04%
Debt to assets ratio:
17.50%
Net debt to assets ratio:
1.16%
Debt-to-asset ratio is -74.90% below industry average
Ability to repay debt:
Interest coverage ratio:
41.02
Interest coverage ratio is -119.44% less than industry average
Looking forward:
Debt growth rate:
0.00%
-
Debt repayment rate in last quarter: 0.00%
Analysis of Key Statistics
Correlation of price movement with the market:
0.626
Statistical significance of correlation:
FTNT has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.48
Stock price is 30.49% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.48
Correlation of price movement with Nasdaq (^IXIC):
0.004
Covariance of price movement with the market:
0.007
Kurtosis
7.055
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
0.014
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
FTNT
Gross Profit Margin Ratio:
302%
Operating Profit Margin Ratio:
18.95%
Operating profit margin is -259.69% lower than the industry
Net Profit Margin Ratio:
302%
Effective Tax Rate:
-0.96%
Effective tax rate is -103.06% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
293.06%
Return on equity (ROE) is 174.53% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
11.29%
Return on assets (ROA) is -398.13% lower than the industry
Financial Leverage:
1.2x
Current Ratio:
1.28
Current ratio is -45.10% below industry average
Cash Conversion Cycle (days):
39.3
Cash conversion cycle is -65.13% below industry average
The remaining useful life of property plant & equipment is: 6.0 years
Stock based compensation to net income ratio:
8.34%
In-depth Efficiency Analysis
Revenue generated per employee:
311.7K
Each employee generates -21% less revenue than industry average revenue per employee
EBITDA generated per employee:
64.5K
Each employee generates -1% less EBITDA than industry average revenue per employee
Profit generated per employee:
55.4K
Each employee generates 165% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
23.8K
Each employee generates 20% more free cash flow than industry average revenue per employee
Assets/Capital per employee
212.3K
Each employee generates 20% more free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
Research & development (R&D) investment growth rate-- 24.25%
Growth rate in R&D investment/expenditure is -1035.31% lower than the industry
Competitors/Peer firms of
FTNT
SYNOPSYS, INC. (XNAS:SNPS)
XILINX, INC. (XNAS:XLNX)
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION (XNAS:CTSH)
MICROCHIP TECHNOLOGY INCORPORATED (XNAS:MCHP)
AUTODESK, INC. (XNAS:ADSK)
DATADOG, INC. (XNAS:DDOG)
NXP Semiconductors NV (XNAS:NXPI)
CROWDSTRIKE HOLDINGS, INC. (XNAS:CRWD)
COINBASE GLOBAL, INC. (XNAS:COIN)
Current Analyst Ratings
Strong buy�25%
Buy�63%
Hold�29%
Sell�8%
Strong sell�0%
Overall analyst sentiment is: Buy
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
3.59B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
880.20M
2.71B
451.90M
150.10M
1.58B
1.43B
-
2.03B
4.70M
18.10M
92.60M
742.50M
679.80M
638.00M
647.70M
- 6200.00K
638.00M
Statement of Cash Flow
Date:
Period:
25.50M
Differed Income Tax :
-
Stock Based Compensation :
53.20M
Change in Working Capital :
108.00M
Accounts Receivables:
15.40M
Other Working Capital:
51.30M
Other Non-Cash Items:
71.10M
Net Cash Provided by Operating Activities:
396.10M
Investments in PP&E:
- 122600.00K
Net Acquisitions:
-
Purchases of Investments:
- 385200.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
923.50M
1.22B
2.14B
790.40M
184.60M
91.70M
3.21B
786.50M
123.80M
55.10M
360.80M
431.70M
684.90M
2.44B
-
5.65B
174.70M
-
-
1.89B
442.50M
2.51B
988.90M
153.90M
2.91B
-
5.42B
200.00K
- 1003400.00K
- 15400.0K
-
March 31, 2022 at 6:00:00 AM
2.91B
217.70M
5.64B
1.58B
988.90M
65.4M
462.40M
-
- 45400.00K
-
11.00M
- 691200.00K
-
- 65800.00K
- 746000.00K
- 300.00K
- 395600.00K
923.50M
1.32B
396.10M
- 122600.00K
273.50M
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
FTNT
2023
2024
2025
2026
2027
$52.80
$232.38
$251.22
$271.59
$293.60