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What's in the Offing for Fortinet (FTNT) This Earnings Season?
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Fortinet (FTNT - Free Report) is slated to report third-quarter 2021 results on Nov 4.
For the quarter, the company estimates revenues of $800-$815 million. The Zacks Consensus Estimate for revenues is pegged at $809.9 million, calling for year-over-year growth of 24.4%.
The Non-GAAP earnings per share are projected at 90-95 cents. The Zacks Consensus Estimate is pegged at 94 cents per share, indicating a year-on-year increase of 6.8%.
The company’s earnings surpassed the consensus mark in the all of the preceding four quarters, the average surprise being 10.8%.
Let’s see how things have shaped up for the upcoming announcement.
Fortinet’s third-quarter performance is likely to have benefited from higher global cybersecurity spending. According to the latest Gartner report, the worldwide spending on information security and risk management technology and services is likely to be up 12.4%, year over year, to $150.4 billion in 2021.
Fortinet’s third-quarter performance is anticipated to have benefited from the heightened demand for security and networking products amid the coronavirus crisis as a huge global workforce is working remotely. Its quarterly performance is also expected to have gained from a robust momentum in FortiGate virtual machines, which is driving the firm’s private and public cloud billings. Management forecasts billings in the band of $940-$960 million for the July-September quarter.
The rapid adoption of FortiGate-based secure SD-WAN offerings is anticipated to have supported Fortinet’s Product segment. The Zacks Consensus Estimate for Product revenues in the June-end quarter is pinned at $285 million, suggesting 27.2% year-over-year growth.
Also, FortiGuard security subscriptions and FortiCare technical support services are likely to have maintained solid traction, aiding the company’s Services segment. The Zacks Consensus Estimate for quarterly Services revenues is pinned at $526 million, calling for 23.2% year-over-year growth.
Moreover, higher inventory balances and extended payment plans are anticipated to have been key positives during the quarter under review.
Apart from this, the company is likely to have gained from its IoT offerings with the Forti- ASIC SPU technology, which provides a cost and performance advantage over its competitors.
However, capital expenditures are expected to have flared up sequentially. Management had estimated capital expenditures for the third quarter between $65 million and $75 million, in its last earnings call.
Increased hiring, mostly in sales and marketing, and mergers & acquisitions spends, are predicted to have weighed on the bottom line.
What Our Model Says
Our proven model does not predict an earnings beat for Fortinet this season. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.
Fortinet currently carries a Zacks Rank of 2 and has an Earnings ESP of 0.00%.
Stocks With Favorable Combinations
Here are some companies, which, per our model, have the right combination of elements to post an earnings beat in their upcoming release:
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What's in the Offing for Fortinet (FTNT) This Earnings Season?
Fortinet (FTNT - Free Report) is slated to report third-quarter 2021 results on Nov 4.
For the quarter, the company estimates revenues of $800-$815 million. The Zacks Consensus Estimate for revenues is pegged at $809.9 million, calling for year-over-year growth of 24.4%.
The Non-GAAP earnings per share are projected at 90-95 cents. The Zacks Consensus Estimate is pegged at 94 cents per share, indicating a year-on-year increase of 6.8%.
The company’s earnings surpassed the consensus mark in the all of the preceding four quarters, the average surprise being 10.8%.
Let’s see how things have shaped up for the upcoming announcement.
Fortinet, Inc. Price and EPS Surprise
Fortinet, Inc. price-eps-surprise | Fortinet, Inc. Quote
Factors to Consider
Fortinet’s third-quarter performance is likely to have benefited from higher global cybersecurity spending. According to the latest Gartner report, the worldwide spending on information security and risk management technology and services is likely to be up 12.4%, year over year, to $150.4 billion in 2021.
Fortinet’s third-quarter performance is anticipated to have benefited from the heightened demand for security and networking products amid the coronavirus crisis as a huge global workforce is working remotely. Its quarterly performance is also expected to have gained from a robust momentum in FortiGate virtual machines, which is driving the firm’s private and public cloud billings. Management forecasts billings in the band of $940-$960 million for the July-September quarter.
The rapid adoption of FortiGate-based secure SD-WAN offerings is anticipated to have supported Fortinet’s Product segment. The Zacks Consensus Estimate for Product revenues in the June-end quarter is pinned at $285 million, suggesting 27.2% year-over-year growth.
Also, FortiGuard security subscriptions and FortiCare technical support services are likely to have maintained solid traction, aiding the company’s Services segment. The Zacks Consensus Estimate for quarterly Services revenues is pinned at $526 million, calling for 23.2% year-over-year growth.
Moreover, higher inventory balances and extended payment plans are anticipated to have been key positives during the quarter under review.
Apart from this, the company is likely to have gained from its IoT offerings with the Forti- ASIC SPU technology, which provides a cost and performance advantage over its competitors.
However, capital expenditures are expected to have flared up sequentially. Management had estimated capital expenditures for the third quarter between $65 million and $75 million, in its last earnings call.
Increased hiring, mostly in sales and marketing, and mergers & acquisitions spends, are predicted to have weighed on the bottom line.
What Our Model Says
Our proven model does not predict an earnings beat for Fortinet this season. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.
Fortinet currently carries a Zacks Rank of 2 and has an Earnings ESP of 0.00%.
Stocks With Favorable Combinations
Here are some companies, which, per our model, have the right combination of elements to post an earnings beat in their upcoming release:
HP (HPQ - Free Report) has an Earnings ESP of +1.89% and currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Applied Materials (AMAT - Free Report) has an Earnings ESP of +0.52% and holds a Zacks Rank of 2, currently.
QUALCOMM (QCOM - Free Report) has an Earnings ESP of +0.35% and carries a Zacks Rank #3, at present.