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ForeScout Technologies Inc (FSCT): Is Tech Attractive Relative To NasdaqGM Peers?

ForeScout Technologies Inc (NASDAQ:FSCT), is a USD$934.35M small-cap, which operates in the tech hardware industry based in United States. The sector has significantly been impacted by technology megatrends, which have changed how industrial and consumer-oriented companies operate. Tech analysts are forecasting for the entire hardware tech, industry, a somewhat weaker growth of 2.65% in the upcoming year , and an overall negative growth rate in the next couple of years. Unsuprisingly, this is below the growth rate of the US stock market as a whole. Today, I will analyse the industry outlook, as well as evaluate whether FSCT is lagging or leading in the industry. Check out our latest analysis for ForeScout Technologies

What’s the catalyst for FSCT’s sector growth?

NasdaqGM:FSCT Past Future Earnings Oct 31st 17
NasdaqGM:FSCT Past Future Earnings Oct 31st 17

US-based mega-competitors, such as Alphabet, Apple and Facebook, have been and appears to continue to be, the key drivers of industry growth. Many tech companies are repositioning themselves by focusing on high-growth areas such as IBM’s artificial intelligence play in Watson and Adobe’s shift to marketing its product for cloud computing. Over the past year, the industry saw growth of 2.47%, though still underperforming the wider US stock market. FSCT lags the pack with its negative growth rate of -56.71% over the past year, which indicates the company will be growing at a slower pace than its tech hardware peers. As the company trails the rest of the industry in terms of growth, FSCT may also be a cheaper stock relative to its peers.

Is FSCT and the sector relatively cheap?

NasdaqGM:FSCT PE PEG Gauge Oct 31st 17
NasdaqGM:FSCT PE PEG Gauge Oct 31st 17

The tech hardware sector’s PE is currently hovering around 29x, higher than the rest of the US stock market PE of 22x. This illustrates a somewhat overpriced sector compared to the rest of the market. However, the industry returned a similar 8.50% on equities compared to the market’s 9.99%. Since FSCT’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge FSCT’s value is to assume the stock should be relatively in-line with its industry.

What this means for you:

Are you a shareholder? FSCT has been a tech industry laggard in the past year. If your initial investment thesis is around the growth prospects of FSCT, there are other tech companies that have delivered higher growth, and perhaps trading at a discount to the industry average. Consider how FSCT fits into your wider portfolio and the opportunity cost of holding onto the stock.

Are you a potential investor? If FSCT has been on your watchlist for a while, now may be a good time to dig deeper into the stock. Although its growth has delivered lower growth relative to its tech peers in the near term, the market may be pessimistic on the stock, leading to a potential undervaluation. Before you make a decision on the stock, I suggest you look at FSCT’s future cash flows in order to assess whether the stock is trading at a reasonable price.

For a deeper dive into ForeScout Technologies’s stock, take a look at the company’s latest free analysis report to find out more on its financial health and other fundamentals. Interested in other tech stocks instead? Use our free playform to see my list of over 1000 other tech companies trading on the market.


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.

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