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Fortinet (FTNT) to Post Q4 Earnings: What's in the Offing?

Zacks Equity Research

Fortinet, Inc. FTNT is set to report fourth-quarter 2019 results on Feb 6.

For the quarter, the company anticipates revenues of $595-$610 million. The Zacks Consensus Estimate for revenues is pegged at $603.25 million, implying growth of 18.98% from the figure reported in the year-ago quarter.

Non-GAAP earnings per share are envisioned to be 69-71 cents. The Zacks Consensus Estimate is pegged at 70 cents per share, indicating an increase of 18.64% from the figure reported in the year-ago quarter.

The company’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 18.1%.

Let’s see how things are shaping up for the upcoming announcement.

Fortinet, Inc. Price and EPS Surprise

Fortinet, Inc. Price and EPS Surprise

Fortinet, Inc. price-eps-surprise | Fortinet, Inc. Quote

Factors at Play

Fortinet’s fourth-quarter performance is expected to have benefited from strong momentum in FortiGate virtual machines, which is driving its private and public cloud billings.

Besides, the rapid adoption of Fortigate-based secure SD-WAN offerings might have positively impacted the company’s Product revenues. The Zacks Consensus Estimate for Product revenues in the fourth quarter stands at $234 million, suggesting 16.4% year-over-year growth.

The company might have continued to benefit from its IoT offering with the Forti- ASIC SPU technology, which provides a cost and performance advantage over its competitors.

In the soon-to-be-reported quarter, Fortinet expects around 60% of revenues from its existing deferred revenue balance, which was $1.95 billion at the end of the last reported quarter.

However, capital expenditures between $40 million and $50 million are expected to have weighed on margins in the fourth quarter.

Moreover, its acquisitions of enSilo in October and CyberSponse in December last year are likely to have dented Fortinet’s cash balance in the quarter under review.

What Our Model Says

The proven Zacks model does not conclusively predict an earnings beat for Fortinet this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Fortinet has an Earnings ESP of -0.11% and a Zacks Rank #3 (Hold).

Stocks to Consider

Here are a few stocks you may consider, as our model shows that these have the right combination of elements to beat on earnings this season:

CDW Corporation CDW has an Earnings ESP of +2.34% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Palo Alto Networks PANW has an Earnings ESP of +1.18% and a Zacks Rank #3.

Check Point Software Technologies CHKP has an Earnings ESP of +0.90% and a Zacks Rank of 3.

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Fortinet, Inc. (FTNT) : Free Stock Analysis Report
 
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