Yahoo Finance Will Fortinet, Inc.’s (NASDAQ:FTNT) Earnings Grow In The Next Couple Of Years?
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Fortinet, Inc.’s (NASDAQ:FTNT) released its most recent earnings update in December 2018, which signalled that the company benefited from a substantial tailwind, more than doubling its earnings from the prior year. Below is my commentary, albeit very simple and high-level, on how market analysts perceive Fortinet’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Check out our latest analysis for Fortinet
Market analysts’ prospects for the coming year seems pessimistic, with earnings decreasing by a double-digit -17%. Beyond this, earnings will begin to improve, expanding year on year, and reaching US$388m by 2022.
Although it is useful to understand the growth each year relative to today’s value, it may be more valuable to evaluate the rate at which the company is growing every year, on average. The pro of this approach is that we can get a better picture of the direction of Fortinet’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I put a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 3.2%. This means that, we can expect Fortinet will grow its earnings by 3.2% every year for the next couple of years.
Next Steps:
For Fortinet, there are three important factors you should further research:
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Valuation: What is FTNT worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether FTNT is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of FTNT? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
