Fortinet (FTNT) To Report Q4 Earnings: What's In The Cards?

Fortinet Inc. (NASDAQ:FTNT) is slated to release fourth-quarter 2018 results on Feb 6.

The stock boasts a stellar record of positive surprises. The company’s earnings beat the Zacks Consensus Estimate in all the last four reported quarters, the average being 17.4%.

In the last reported quarter, the company’s non-GAAP earnings per share of 49 cents exceeded the Zacks Consensus Estimate of 42 cents and also improved significantly from the year-ago quarter’s bottom line of 28 cents.

Moreover, revenues of $453.9 million surpassed the Zacks Consensus Estimate of $451 million and also increased 21% from the year-earlier period.

What to Expect in Q4

For the fourth quarter, the company expects revenues of $490-$500 million. The Zacks Consensus Estimate is pegged at $495.5 million, indicating an 18.9% rise from the prior-year quarter.

The company anticipates non-GAAP earnings per share to be in the band of 50-52 cents. The Zacks Consensus Estimate for earnings stands at 51 cents per share, reflecting a surge of 59.4% on a year-over-year basis.

Non-GAAP gross margin is expected in the range of 75-76% whereas non-GAAP operating margin is projected between 24% and 24.5%.

So, let’s see how things are shaping up prior to this announcement.

Factors at Play

Fortinet is riding on digital transformation and security refresh cycle across most industries. Its experience in the security space and mission-critical solutions is helping it maintain and grow its market share in the booming cyber security space. Multiple deal wins and customer additions are aiding top-line growth.

Notably, strength in overall product suite of Security Fabric, which provides a unified security across the entire digital attack surface, is helping it penetrate the enterprise market and grow its share in the same. Moreover, the recent acquisitions of ZoneFox and Bradford Networks by enhancing Security Fabric with additional product capabilities are likely to drive growth.

Furthermore, growing adoption of the company’s Software-Define Wide Area Network (SD-WAN) solutions is a tailwind. Being the only vendor that offers both security and SD-WAN solutions, the company is witnessing strong demand in the market.

We expect a solid performance in both the Services and Product segments. The company’s high-end E-Series appliances are likely to aid its strong Product growth.

However, stiff competition from key network security players, such as Cisco Systems (NASDAQ:CSCO) , Check Point (NASDAQ:CHKP) , Juniper Networks (NYSE:JNPR) and Palo Alto Networks (NYSE:PANW) remains a headwind.

Fortinet has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

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