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Fortinet (FTNT) Stock Sinks As Market Gains: What You Should Know

Zacks Equity Research

Fortinet (FTNT) closed at $86.45 in the latest trading session, marking a -0.12% move from the prior day. This change lagged the S&P 500's daily gain of 0.36%. Meanwhile, the Dow gained 0.01%, and the Nasdaq, a tech-heavy index, added 0.27%.

Heading into today, shares of the network security company had gained 12.46% over the past month, outpacing the Computer and Technology sector's gain of 4.78% and the S&P 500's gain of 3.98% in that time.

Investors will be hoping for strength from FTNT as it approaches its next earnings release, which is expected to be August 1, 2019. In that report, analysts expect FTNT to post earnings of $0.50 per share. This would mark year-over-year growth of 21.95%. Meanwhile, our latest consensus estimate is calling for revenue of $510.89 million, up 15.77% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.13 per share and revenue of $2.09 billion, which would represent changes of +15.76% and +15.77%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for FTNT. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. FTNT is currently a Zacks Rank #3 (Hold).

Digging into valuation, FTNT currently has a Forward P/E ratio of 40.57. Its industry sports an average Forward P/E of 41.45, so we one might conclude that FTNT is trading at a discount comparatively.

Investors should also note that FTNT has a PEG ratio of 2.7 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Security was holding an average PEG ratio of 2.43 at yesterday's closing price.

The Security industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 87, putting it in the top 34% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow FTNT in the coming trading sessions, be sure to utilize Zacks.com.

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