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

Zacks Equity Research

In the latest trading session, Fortinet (FTNT) closed at $76.28, marking a -0.36% move from the previous day. This move lagged the S&P 500's daily gain of 0.69%. Elsewhere, the Dow gained 0.22%, while the tech-heavy Nasdaq added 0.91%.

Coming into today, shares of the network security company had lost 2.38% in the past month. In that same time, the Computer and Technology sector lost 0.49%, while the S&P 500 lost 0.61%.

Investors will be hoping for strength from FTNT as it approaches its next earnings release, which is expected to be October 31, 2019. On that day, FTNT is projected to report earnings of $0.56 per share, which would represent year-over-year growth of 27.27%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $532.96 million, up 17.42% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.25 per share and revenue of $2.11 billion, which would represent changes of +22.28% and +17.3%, respectively, from the prior year.

Any recent changes to analyst estimates for FTNT should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.12% lower. FTNT is currently a Zacks Rank #3 (Hold).

Digging into valuation, FTNT currently has a Forward P/E ratio of 34.05. Its industry sports an average Forward P/E of 37.15, so we one might conclude that FTNT is trading at a discount comparatively.

It is also worth noting that FTNT currently has a PEG ratio of 2.43. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Security stocks are, on average, holding a PEG ratio of 2.26 based on yesterday's closing prices.

The Security industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 172, putting it in the bottom 33% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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