Fortinet (FTNT)

Fortinet (FTNT)

Summary:  On Sale

Score:  16/20

MOS:  80%

Share Price:  $322

Sticker Price:  $1,619

The previous Tykr review on Fortinet was completed on May 12, 2021. At that time the summary was as follows:

Summary:  On Sale

Score:  13/20

MOS:  70%

Share Price:  $204

Sticker Price:  $704


Is Fortinet stock a good buy?

Fortinet is a multinational corporation founded in 2000 and headquartered in Sunnyvale, CA. They develop and sell cybersecurity solutions such as firewalls, anti-virus, intrusion prevention, and endpoint security.

Company History

Prior to Fortinet, Ken Xie (CEO of Fortinet) founded and served as an executive for NetScreen, a company that was acquired by Juniper Networks in 2004. Michael Xie (Brother of Ken Xie and CTO of Fortinet) served as an executive for ServeGate. In 2000, they co-founded Appligation Inc. The company was renamed to ApSecure in December 2000 and later renamed again to Fortinet, based on the phrase “Fortified Networks”.


Business Model

Fortinet serves enterprise as well as SMB (small and mid-sized businesses) customers.

Enterprise product lines: Network security, cloud security, security operations, zero trust access, networking and communications, and security-as-a-service.

SMB product lines: Office networking, endpoint, and remote user protection, cloud applications, and email.

Serving either enterprise or SMBs can be highly lucrative but capitalizing on both can put a business at the top of the food chain. Typically, a company will find a niche by serving either enterprise or SMBs. Doing both is actually quite difficult. It takes a mature business to have the ability to serve both as you not only need to engineer products to see both but you also need separate marketing and sales processes.

I like enterprise SaaS best because it is both highly lucrative and sticky. Most customers sign contracts that can span 3, 5, 7, and sometimes 10 years, and those customers can pay hundreds of thousands on up to millions of dollars per year. But adding SMBs to the mix shows that Fortinet has a lot of market share to capitalize on globally.

Some of their customers include Siemens, BMW, Checkers, Alaska Airlines, BatteriesPlus, University of Birmingham, Rollins, Softbank, Waste Management, and more.

Although cybersecurity isn’t a glamorous industry, it’s an absolute necessity. Companies spend a lot of money keeping their businesses safe from debilitating cyber attacks.



On January 5th, I received a stockpiling alert on Fortinet. A stockpiling alert is any stock that drops 10% in the last 7 days. In this circumstance, it’s not the stock that’s falling, it’s the tech sector. This is a good sign. In other words, when the sector or market is falling, that’s a stockpiling opportunity to buy more.

This article from lists 7 of the best cybersecurity stocks for 2022. The list includes Microsoft, Fortinet, Crowdstrike Holdings, Zscaler, Palo Alto Networks, Okta, and Tenable Holdings. This article specifically mentions that Fortinet was recently added to the Nasdaq-100 due to its impressive growth and strong fundamentals.

This article from states the continued revenue growth and impressive free cash flow make this stock a great buy in 2022 as well. This article also mentions that Fortinet is not the fastest-growing cyber security stock which is totally fine. When looking long-term, it’s slow and steady that wins the race. It’s much more important to have a stock that generations continuous returns rather than riding highly volatile waves that may not recover.

This article from quotes Dan Ives, MD at Wedbush Securities, “we view the stock move as a clear buying opportunity, given our bullish view of the tech sector setup into 2022. Over the past 18 months, our bullish tech playbook has been unchanged. Any time we get 10-year Treasury yield spikes/variant fears/second wave worries, we view this as a buying opportunity to own the tech secular winners.” Although the tech sector is experiencing a selloff, the opportunity to buy has arrived.

This article from states that Fortinet manufactures its own proprietary chip, purpose-built for network security. This chip gives Fortinet customers 5x – 10x more computing power at a lower cost. Manufacturing their own chips can cost billions of dollars but the benefit is the quality, performance, and pricing power. Fortinet also develops a product called Security Fabric which is a cybersecurity mesh. According to Gartner, by 2024, organizations adopting a cybersecurity mesh architecture will reduce the financial impacts of security incidents by an average of 90%.


Competitive Comparison

Fortinet (FTNT)

Summary:  On Sale

Score:  16/20

MOS:  80%

Share Price:  $322

Sticker Price:  $1,619

Revenue: $2.5B


Cyberark (CYBR)

Summary: Overpriced

Score: 6

MOS: 1%

Share Price:  $164

Sticker Price:  $166

Revenue: $464M


Crowdsrike Holdings (CRWD)

Summary: Overpriced

Score: 8/20

MOS: 1%

Share Price:  $189

Sticker Price:  $191

Revenue: $874M


SailPoint Technology Holdings (SAIL)

Summary: Overpriced

Score: 1/20

MOS: 1%

Share Price:  $46

Sticker Price:  $46

Revenue: $365M


PANW (Palo Alto Networks)

Summary: Overpriced

Score: 7/20

MOS: 1%

Share Price:  $524

Sticker Price:  $529

Revenue: $4.2B


Cloudflare (NET)

Summary: Overpriced

Score: 7/20

MOS: 1%

Share Price:  $114

Sticker Price:  $116

Revenue: $431M

Fortinet stands out from the competition within Tykr but keep in mind, cybersecurity is highly in demand so there is plenty of business to go around.


4 M’s

MOS (Margin of Safety): The financials are outstanding. A Score of 16/20 shows the impressive financial strength of the company and the MOS of 80% shows this stock has a lot of upside potential.

Meaning: Will cybersecurity be around in 10 years? Absolutely. Based on this article from, the cybersecurity market was valued at $156B in 2020 and is expected to reach $325B by 2026. 

Moat: Although Fortinet has a few competitors, Fortinet is able to serve both enterprise and SMB customers. If you like investing in B2B tech businesses, try to gain an understanding of what cohort the business serves. Serving either enterprise or SMB is great but serving both is ideal. Fortinet has arrived at that point which makes them a safer investment. It’s also important to note the development of their own chip and cybersecurity mesh gives the company a strong competitive advantage.

Management: The brothers that run Fortinet, Ken Xie (CEO) and Michael Xie (CTO), are highly experienced within the cybersecurity industry. Ken Xie has developed two other cybersecurity companies including Netscreen which was acquired by Juniper for $4B. They both have done a great job running this company.



Now let’s take a look at the financials. A good value investor should be able to read the income statement, cash flow statement, and balance sheet and within 60 seconds have a pretty good idea of how the business is performing.


Revenue (Found on the Income Statement)

2017:  $1.4B

2018:  $1.8B

2019:  $2.1B

2020:  $2.5B

Revenue has increased consistently over the last 4 years.


Net Income (Found on the Income Statement)

2017:  $31M

2018:  $332M

2019:  $326M

2020:  $488M

Net Income has significantly increased in 2020.


EPS (Found on the Income Statement)

2017:  .18

2018:  1.96

2019:  1.91

2020:  2.86

EPS has significantly increased in 2020.


Free Cash Flow (Found on the Cash Flow Statement)

2017:  $459M

2018:  $585M

2019:  $715M

2020:  $957M

Free Cash Flow has increased consistently over the last 4 years.


Total Assets (Found on the Balance Sheet)

2017:  $2.2B

2018:  $3B

2019:  $3.8B

2020:  $4B

Total Assets have increased consistently over the last 4 years.


Total Liabilities (Found on the Balance Sheet)

2017:  $1.6B

2018:  $2B

2019:  $2.5B

2020:  $3.1B

The Total Liabilities have slightly increased which is okay.


Total Debt (Found on the Balance Sheet)

2017:  $0

2018:  $0

2019:  $0

2020:  $0

No debt! This is a great sign.


Total Equity (Found on the Balance Sheet)

2017:  $589M

2018:  $1B

2019:  $1.3B

2020:  $856M

The Total Equity has decreased which isn’t bad.

With a score of 16/20 and a MOS of 80%, the business financials are looking great. When it comes to the Meaning, we expect cybersecurity will grow substantially over the next 5 years and we know cybersecurity will still be in demand 10 years into the future. When it comes to the Moat, Fortinet has a strong competitive advantage because of its ability to produce its own chips and cybersecurity mesh. When it comes to Management, both Ken and Michael Xie’s vision to develop high-quality products for both enterprise and SMBs has proven to pay off. Keep your eyes on these brothers, as they continue to grow the company over the coming years.

If you’re interested in a tech stock that is poised for growth, Fortinet is worth a look.

The Summary, Score, and MOS of this stock may have changed since the posting of this review. Please login to Tykr to see up-to-date information.