Fortinet, Inc. (FTNT) Stock Analysis
Fortinet, Inc. (FTNT) Stock Analysis
Analysis from 10-Q filed 2025-11-07. Data as of Q4 2025.
Overall Grade: F (Concerning)
Fortinet, Inc. faces challenges in financial performance that warrant careful analysis.
| Metric | Value | Context |
|---|---|---|
| ROIC | 54.5% | Above industry average |
| FCF Margin | 35.1% | Strong cash generation |
| Debt/Equity | 0.8x | Moderate leverage |
Investment Thesis: Strong return on invested capital of 54.5% suggests durable competitive advantages and efficient capital allocation.
Explore Fortinet, Inc.: Earnings History | Filing Intelligence | ROIC Analysis
Profitability: Fortinet, Inc. earns 54.5% ROIC, Top 5% in Technology
Fortinet, Inc.'s trailing-twelve-month ROIC of 54.5% ranks Top 5% in Technology companies (sector median: 5.2%), driven by NOPAT margin of 24.8% combined with asset turnover of 0.7x. Source: 10-Q filed 2025-11-07. Gross margin of 80.5% with operating margin at 30.7% reflects strong pricing power.
| Metric | FTNT | Rating | Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 54.5% | Excellent | Above sector median of 5.2% |
| Return on Equity (ROE) | 121.1% | Excellent | Efficient use of shareholder equity |
| Gross Margin | 80.5% | Excellent | Strong pricing power |
| Operating Margin | 30.7% | Excellent | Efficient operations |
Cash Flow: Fortinet, Inc. generates $2.4B FCF at 35.1% margin, positive NaN/8 quarters
Fortinet, Inc. generated $2.4B in free cash flow (TTM), a 35.1% FCF margin, a margin that ranks Top 10% in Technology. Operating cash flow exceeds net income by 1.4x, indicating high earnings quality. FCF was positive in N/A of the last 8 quarters. Source: 10-Q filed 2025-11-07.
| Metric | FTNT | Rating | Context |
|---|---|---|---|
| Free Cash Flow Margin | 35.1% | Excellent | Excellent cash conversion |
| Free Cash Flow (TTM) | $2.4B | Good | Positive cash generation |
| OCF/Net Income | 1.4x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
Balance Sheet: Fortinet, Inc. at 0.8x leverage
Fortinet, Inc.'s debt-to-equity ratio of 0.8x reflects elevated leverage. Net cash position of $1.5B provides financial flexibility. Source: 10-Q filed 2025-11-07.
| Metric | FTNT | Rating | Context |
|---|---|---|---|
| Debt to Equity | 0.8x | Adequate | Moderate leverage |
| Net Cash Position | $1.5B | Excellent | Net cash positive |
Valuation: Fortinet, Inc. trades at 32.5x earnings
Fortinet, Inc. trades at a P/E of 32.5x. Free cash flow yield of 4.0% reflects market expectations for growth.
| Metric | FTNT | Rating | Context |
|---|---|---|---|
| P/E Ratio | 32.5x | Adequate | Premium valuation |
| EV/Sales | 8.6x | Adequate | Growth premium priced in |
| FCF Yield | 4.0% | Adequate | Lower cash yield |
Capital Allocation: Fortinet, Inc. returns 0.0% shareholder yield
Fortinet, Inc.'s total shareholder yield is 0.0% (dividends + buybacks). Source: 10-Q filed 2025-11-07.
| Metric | FTNT | Rating | Context |
|---|---|---|---|
| Total Shareholder Yield | 0.0% | Warning | Dividend + buyback yield combined |
| Total Capital Returned (TTM) | $0 | Adequate | Dividends + buybacks returned to shareholders |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 54.5% | Top 5% | 10.4x above |
| Free Cash Flow Margin | 35.1% | Top 10% | 3.9x above |
| Gross Margin | 80.5% | Top 25% | 1.6x above |
| Operating Margin | 30.7% | Top 10% | 6.3x above |
| Return on Equity (ROE) | 121.1% | Top 5% | 24.7x above |
| P/E Ratio | 32.5x | N/A | - |
Financial Scorecard
| Metric | FTNT | Rating | Sector Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 54.5% | Excellent | Top 5% of sector (median: 5.2%) |
| Free Cash Flow Margin | 35.1% | Excellent | Top 10% of sector (median: 9.1%) |
| Gross Margin | 80.5% | Excellent | Top 25% of sector (median: 51.8%) |
| Debt to Equity Ratio | 80.5% | Adequate | Elevated but manageable |
| P/E Ratio (Price-to-Earnings) | 32.5x | Adequate | Growth premium |
| Free Cash Flow Yield | 4.0% | Adequate | Moderate yield |
Frequently Asked Questions
Q: What is Fortinet, Inc.'s Return on Invested Capital (ROIC)?
Fortinet, Inc. (FTNT) has a trailing twelve-month Return on Invested Capital (ROIC) of 54.5%. This compares above the sector median of 5.2%. An ROIC above 20% indicates exceptional capital efficiency and strong competitive advantages.
Q: What is Fortinet, Inc.'s Free Cash Flow Margin?
Fortinet, Inc. (FTNT) has a free cash flow margin of 35.1%, generating $2.4 billion in free cash flow over the trailing twelve months. A FCF margin above 20% indicates excellent cash conversion and a high-quality business model.
Q: Is Fortinet, Inc. stock overvalued or undervalued?
Fortinet, Inc. (FTNT) trades at a P/E ratio of 32.5x, which is above the sector median of N/A. The EV/Sales multiple is 8.6x. Free cash flow yield is 4.0%, which is in line with market averages.
Q: How much debt does Fortinet, Inc. have?
Fortinet, Inc. (FTNT) has a debt-to-equity ratio of 0.8x with total debt of $996.3 million. Despite carrying debt, the company maintains a net cash position of $1.5 billion.
Q: What is Fortinet, Inc.'s revenue and earnings growth?
Fortinet, Inc. (FTNT) grew revenue by 57.2% year-over-year. Earnings per share increased by 7.1% compared to the prior year. Double-digit revenue growth indicates strong demand and market share gains.
Q: Is Fortinet, Inc. buying back stock?
Fortinet, Inc. (FTNT) repurchased $2.3 billion of stock over the trailing twelve months. This represents a buyback yield of 3.8%.
Q: How does Fortinet, Inc. compare to competitors in Technology?
Compared to other companies in Technology, Fortinet, Inc. (FTNT) shows: ROIC of 54.5% is above the sector median of 5.2% (Top 0%). FCF margin of 35.1% exceeds the sector median of 9.1% (Top 6% of sector). Gross margin at 80.5% is 28.6 percentage points higher than sector peers. These rankings are based on MetricDuck's analysis of all Technology companies with available SEC filings.
Q: What warning signs should I watch for with Fortinet, Inc.?
Investors in Fortinet, Inc. (FTNT) should monitor these potential warning signs: 1) ROIC has been declining, potentially signaling deteriorating competitive position. Regular monitoring of SEC filings and quarterly trends is recommended.
Data Source: Data sourced from 10-Q filed 2025-11-07. TTM metrics as of Q4 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.
This analysis is for informational purposes only and does not constitute investment advice.