NASDAQ · Technology

Fortinet, Inc.

FTNT · Software - Infrastructure

$144.73

▲ 0.59 (0.41%)

Cached · 10 min

Overall Grade

Defensive

Enterprising

Profitability

A⤢

Gross Profit Margin 80.3%

Operating Margin 31.4%

Net Income Margin 28.9%

Fin. Health

A⤢

Years to Pay Off Debt 0.9 yrs

Working Capital vs Long-Term Debt $212M

Working Capital $709M

Valuation

F⤢

Margin of Safety 0.0%

Price-to-Book 107.14x

Cash Flow

A⤢

Free Cash Flow $1.0B

CapEx % of Net Income 13.2%

Owner Earnings $645M

Profitability

Gross Profit Margin 80.3%

Revenue minus cost of goods sold. Graham's ≥40% threshold identifies businesses with durable pricing power. Note: software and financial companies naturally exceed this; retailers and manufacturers rarely reach it due to their cost structures.

Operating Margin 31.4%

Profit after operating costs before interest and taxes. A consistent ≥15% operating margin signals a business with real competitive advantages. Capital-intensive industries (airlines, auto, commodities) rarely hit this threshold due to their structural cost base — compare within industry for context.

Net Income Margin 28.9%

Bottom-line profit as a percentage of revenue. The ≥20% target reflects Buffett's preference for highly profitable businesses. Financial engineering (buybacks, tax optimisation) can inflate this temporarily — look for consistency across multiple years rather than a single strong result.

Financial Health

Years to Pay Off Debt 0.9 yrs

Total Debt ÷ Net Income. Lower = stronger balance sheet. Important caveat: utilities, telecoms, REITs, and infrastructure companies carry large structural debt by design — their bond-like cash flows service it comfortably at ratios that would alarm Graham. Compare within sector.

Working Capital vs Long-Term Debt $212M

Working Capital minus Long-Term Debt. Negative results are common and expected in capital-return-focused businesses like Apple, Domino's, and McDonald's — where aggressive buybacks and dividends intentionally reduce book equity. This does not indicate financial distress in high-FCF businesses.

Working Capital $709M

Current Assets minus Current Liabilities. Negative working capital can be a deliberate efficiency strategy in businesses that collect cash before paying suppliers (retailers, fast food franchises, subscription businesses). Assess alongside free cash flow generation for full context.

Cash Flow

Free Cash Flow $1.0B

Operating cash flow minus capital expenditures. Buffett's most important metric — cash a business actually generates for its owners after maintaining and growing its asset base. Consistently positive FCF is one of the strongest indicators of a durable, well-run business regardless of accounting profits.

CapEx % of Net Income 13.2%

Capital expenditure as a share of net income. Low CapEx signals a capital-light business that doesn't need heavy reinvestment to sustain earnings — Buffett's ideal. High CapEx is structurally necessary in manufacturing, airlines, telecoms, and semiconductors. For these industries, a high reading reflects the business model, not poor management.

Owner Earnings $645M

Net Income + Depreciation & Amortisation − Capital Expenditures. Buffett's preferred measure of a company's true annual earning power — what could theoretically be distributed to owners without impairing the business. More reliable than reported EPS because it accounts for the capital cost of maintaining the business.

Defensive — Graham's strict criteria (P/B, P/E, dividends, stability) · Enterprising — Profitability & cash flow focused, accepts higher valuations for quality

About Fortinet, Inc.

Fortinet, Inc. provides cybersecurity and convergence of networking and security solutions worldwide. The company offers FortiOS, a unified operating system designed to address cybersecurity threats; FortiASIC application-specific integrated circuit (ASIC)-based security processing units; FortiCloud, a private cloud software as a service platform; FortiAI, which provides a dual-layered defense across the Fortinet Security Fabric; FortiEndpoint, which converges secure connectivity, endpoint protection, and capabilities into a single agent; and OT Security, which protect the engineered systems that underpin infrastructure and supply chains. It also provides secure networking solutions that focus on the convergence of networking and security; network firewall solutions comprising FortiGate data centers, hyperscale, and distributed firewalls; wireless local area network solutions; and secure connectivity solutions. In addition, the company offers the Fortinet Unified Secure Access Service Edge solutions that include firewall, software-defined wide-area network, secure web gateway, cloud access services broker, data loss prevention, and zero trust network access; and web application firewalls, cloud network security with virtualized firewalls, cloud-native firewalls, cloud-native application protection, and code security. Further, it provides AI-driven security operation solutions, which include a suite of cybersecurity solutions, as well as FortiEDR, FortiXDR, FortiNDR, FortiSandbox, FortiDeceptor, FortiDLP, and FortiRecon. Additionally, the company offers FortiGuard Labs, a cybersecurity threat intelligence and research organization; FortiGuard and Other Security Services, a suite of AI-powered security capabilities that consists of FortiGuard application, content, device, NOC/SOC, and web security services; and FortiCare technical support services. Fortinet, Inc. was incorporated in 2000 and is headquartered in Sunnyvale, California.

Market Data

Market Cap $106.0B

Enterprise Value $105.0B

P/E (TTM) 56.32

Dividend Yield N/A

Exchange NASDAQ

Key Margins

Gross Profit 80.3%

Operating Margin 31.4%

Net Margin 28.9%

Company Info

Sector Technology

Industry Software - Infrastructure

Employees 15311

Country United States

Visit website

📖

Full Graham Analysis

Mr. Market is currently offering Fortinet, Inc. at $144.73.

The business passes only 1 of 7 of Graham's defensive criteria — well below his required standard.

At $144.73, the stock trades at a 2993% premium to its Graham Number of $4.68. Graham would consider this price speculative.

There is no margin of safety at the current price. Graham would advise patience and waiting for a better entry point.

Negative NCAV — liabilities exceed current assets. Common in capital-return businesses (buybacks, debt-funded dividends) and capital-intensive industries. Not automatically a warning sign..

Conclusion: By Graham's standards, this stock is speculative at its current price. The intelligent investor would look elsewhere or wait.

Showing Key Metrics

Income Highlights

Metric	Q1 2026	Q4 2025	Q4 2024
Gross Profit %	80.3%▲	79.6%•	N/A
Operating Margin %	31.4%▼	32.8%•	N/A
Net Income %	28.9%▲	26.6%•	N/A
Diluted EPS	0.72▲	0.68•	N/A

Balance Sheet Highlights

Metric	Q1 2026	Q4 2025	Q4 2024
Total Assets	$9.9B	$10.4B	N/A
Total Debt	$497M▼	$996M•	N/A
Working Capital	$709M▼	$866M•	N/A
Years to Pay Debt	0.93	1.97	N/A

Cash Flow Highlights

Metric	Q1 2026	Q4 2025	Q4 2024
Free Cash Flow	$1.0B▲	$577M•	N/A
Owner Earnings	$645M	$588M	N/A
CapEx % of Net Income	13.2%	8.5%	N/A

Income Statement

	2026	2025	2024
Tax Rate For Calcs	0	0
Normalized EBITDA	700,600	694,700
Total Unusual Items			0
Total Unusual Items Excluding Goodwill			0
Net Income From Continuing Operation Net Minority Interest	534,500	506,000
Reconciled Depreciation	39,800	39,500
Reconciled Cost Of Revenue	364,500	389,200
EBITDA	700,600	694,700
EBIT	660,800	655,200
Net Interest Income	28,700	27,900
Interest Expense	4,200	4,400
Interest Income	32,900	32,300
Normalized Income	534,500	506,000
Net Income From Continuing And Discontinued Operation	534,500	506,000
Total Expenses	1,269,600	1,279,400
Total Operating Income As Reported	580,000	625,600
Diluted Average Shares	742,800	748,000
Basic Average Shares	738,800	743,100
Diluted EPS	0	0
Basic EPS	0	0
Diluted NI Availto Com Stockholders	534,500	506,000
Net Income Common Stockholders	534,500	506,000
Net Income	534,500	506,000
Net Income Including Noncontrolling Interests	534,500	506,000
Net Income Continuous Operations	534,500	506,000
Earnings From Equity Interest Net Of Tax	-100	0
Tax Provision	122,000	144,800
Pretax Income	656,600	650,800
Other Income Expense	47,900	-2,700
Other Non Operating Income Expenses	47,900	-2,700
Special Income Charges			0
Restructuring And Mergern Acquisition			0
Net Non Operating Interest Income Expense	28,700	27,900
Interest Expense Non Operating	4,200	4,400
Interest Income Non Operating	32,900	32,300
Operating Income	580,000	625,600
Operating Expense	905,100	890,200
Other Operating Expenses	-1,400	-1,400
Research And Development	214,000	205,000
Selling General And Administration	692,500	686,600
Selling And Marketing Expense	636,300	629,300
General And Administrative Expense	56,200	57,300
Other Gand A	56,200	57,300
Gross Profit	1,485,100	1,515,800
Cost Of Revenue	364,500	389,200
Total Revenue	1,849,600	1,905,000
Operating Revenue	1,849,600	1,905,000

Balance Sheet

	2026	2025	2024
Ordinary Shares Number	734,000	743,000
Share Issued	734,000	743,000
Total Debt	496,800	996,300
Tangible Book Value	645,300	882,800
Invested Capital	1,486,500	2,233,800
Working Capital	709,100	866,200
Net Tangible Assets	645,300	882,800
Common Stock Equity	989,700	1,237,500
Total Capitalization	1,486,500	1,734,100
Total Equity Gross Minority Interest	989,700	1,237,500
Stockholders Equity	989,700	1,237,500
Gains Losses Not Affecting Retained Earnings	-27,700	-25,400
Other Equity Adjustments	-27,700	-25,400
Retained Earnings	-782,000	-507,900
Additional Paid In Capital	1,798,700	1,770,100
Capital Stock	700	700
Common Stock	700	700
Total Liabilities Net Minority Interest	8,893,800	9,151,700
Total Non Current Liabilities Net Minority Interest	4,270,300	4,117,700
Other Non Current Liabilities	148,300	141,300
Non Current Deferred Liabilities	3,625,200	3,479,800
Non Current Deferred Revenue	3,625,200	3,479,800
Long Term Debt And Capital Lease Obligation	496,800	496,600
Long Term Debt	496,800	496,600
Current Liabilities	4,623,500	5,034,000
Current Deferred Liabilities	3,726,300	3,636,000
Current Deferred Revenue	3,726,300	3,636,000
Current Debt And Capital Lease Obligation		499,700
Current Debt		499,700
Other Current Borrowings		499,700
Payables And Accrued Expenses	897,200	898,300
Current Accrued Expenses	658,500	667,500
Payables	238,700	230,800
Accounts Payable	238,700	230,800
Total Assets	9,883,500	10,389,200
Total Non Current Assets	4,550,900	4,489,000
Other Non Current Assets	117,100	125,200
Non Current Deferred Assets	2,058,200	2,050,400
Non Current Deferred Taxes Assets	1,304,500	1,314,900
Investments And Advances	339,700	339,700
Investmentin Financial Assets	339,700	339,700
Available For Sale Securities	339,700	339,700
Goodwill And Other Intangible Assets	344,400	354,700
Other Intangible Assets	87,000	97,300
Goodwill	257,400	257,400
Net PPE	1,691,500	1,619,000
Accumulated Depreciation	-503,100	-481,900
Gross PPE	2,194,600	2,100,900
Leases	58,300	58,500
Construction In Progress	84,700	74,600
Other Properties	22,000	24,100
Machinery Furniture Equipment	412,500	377,300
Buildings And Improvements	980,800	974,000
Land And Improvements	636,300	592,400
Current Assets	5,332,600	5,900,200
Other Current Assets	181,900	227,000
Inventory	369,600	399,500
Finished Goods	305,100	334,600
Work In Process	1,900	3,000
Raw Materials	62,600	61,900
Receivables	1,486,200	1,691,200
Accounts Receivable	1,486,200	1,691,200
Allowance For Doubtful Accounts Receivable		-7,400	-5,900
Gross Accounts Receivable		1,698,600	1,469,300
Cash Cash Equivalents And Short Term Investments	3,294,900	3,582,500
Other Short Term Investments	1,071,100	1,087,200
Cash And Cash Equivalents	2,223,800	2,495,300

Cash Flow

	2026	2025	2024
Free Cash Flow	1,006,500	577,400
Repurchase Of Capital Stock	-823,000	-57,200
Repayment Of Debt	-500,000
Issuance Of Capital Stock	17,600	7,100
Capital Expenditure	-70,600	-42,800
Income Tax Paid Supplemental Data	47,000	117,600
End Cash Position	2,223,800	2,495,300
Beginning Cash Position	2,495,300	1,995,700
Effect Of Exchange Rate Changes	0	-1,600
Changes In Cash	-271,500	501,200
Financing Cash Flow	-1,342,900	-72,700
Cash Flow From Continuing Financing Activities	-1,342,900	-72,700
Net Other Financing Charges	-37,500	-22,600
Net Common Stock Issuance	-805,400	-50,100
Common Stock Payments	-823,000	-57,200
Common Stock Issuance	17,600	7,100
Net Issuance Payments Of Debt	-500,000
Net Long Term Debt Issuance	-500,000
Long Term Debt Payments	-500,000
Investing Cash Flow	-5,700	-46,300
Cash Flow From Continuing Investing Activities	-5,700	-46,300
Net Other Investing Changes		0	0
Net Investment Purchase And Sale	64,900	-3,500
Sale Of Investment	415,600	480,000
Purchase Of Investment	-350,700	-483,500
Net Business Purchase And Sale	0	0
Purchase Of Business	0	0
Net PPE Purchase And Sale	-70,600	-42,800
Purchase Of PPE	-70,600	-42,800
Operating Cash Flow	1,077,100	620,200
Cash Flow From Continuing Operating Activities	1,077,100	620,200
Change In Working Capital	385,800	-82,100
Change In Other Working Capital	134,300	374,900
Change In Other Current Liabilities	-600	-600
Change In Other Current Assets	-5,400	-2,600
Change In Payables And Accrued Expense	-34,100	83,900
Change In Accrued Expense	-8,100	67,500
Change In Payable	-26,000	16,400
Change In Account Payable	-26,000	16,400
Change In Prepaid Assets	62,800	-31,600
Change In Inventory	23,600	18,500
Change In Receivables	205,200	-524,600
Changes In Account Receivables	205,200	-524,600
Other Non Cash Items	49,300	90,700
Stock Based Compensation	72,500	72,500
Amortization Of Securities	-4,800	-6,400
Depreciation Amortization Depletion	39,800	39,500
Depreciation And Amortization	39,800	39,500
Amortization Cash Flow	10,300	12,600
Amortization Of Intangibles	10,300	12,600
Depreciation	29,500	26,900
Operating Gains Losses			5,500
Earnings Losses From Equity Investments			5,500
Net Income From Continuing Operations	534,500	506,000

📊 Quarterly mode — Graham Fair Value & 7 Criteria require annual data. Switch to Annual for full analysis.

Quarter vs Same Quarter Last Year

YoY strips seasonality

Revenue Growth (YoY)

Prior year: $1.5B ▲ $1.8B +20.1%

Revenue growth vs same quarter last year strips seasonality. Consistent double-digit growth is a Buffett hallmark.

Gross Margin

Prior year: 81.0% ▲ 80.3% -0.7pp

Buffett: consistent gross margin above 40% signals durable pricing power and competitive moat.

Operating Margin

Prior year: 37.7% ▲ 31.4% -6.3pp

Graham: operating margin reflects true business economics before financing. Trend matters as much as level.

Net Margin

Prior year: 28.1% ▲ 28.9% +0.7pp

Net margin can be distorted by one-time items, tax timing, or interest costs — compare to operating margin for signal quality.

Quarterly Health Checks

3 Graham/Buffett criteria that are valid and reliable on quarterly data

✅ Adequate Size

Graham required scale for resilience. Quarterly revenue × 4 gives an annualised proxy.

$1.8B/qtr (≈$7.4B ann.)

vs > $1.5B annualised revenue

❌ Financial Condition

Current assets vs current liabilities — a real-time liquidity snapshot. Valid and reliable on quarterly data.

1.15x current ratio

vs ≥ 2.0x

✅ Free Cash Flow

Buffett's most important single metric. A positive FCF quarter means the business generated real cash for owners after maintaining its asset base.

$1.0B

vs Positive

Operating Cash Flow

$1.1B

Latest quarter · Buffett's cash reality check

ROIC

8.7%

Based on latest annual operating income

Return on Invested Capital — Buffett's preferred measure for asset-light businesses. ROIC > 15% consistently signals a durable competitive advantage (moat). More meaningful than P/B for software, pharma, and consumer brand companies where most value is intangible and off-balance-sheet.

Market Cap / Net Assets

107.1x

Net Assets: $990M

Asset Context — Software - Infrastructure

Software companies store most of their value in code, IP, recurring revenue, and customer relationships — none of which appear on the balance sheet under GAAP. Book value and Net Assets are poor proxies for intrinsic value here. Focus on ROIC, gross margin trajectory, and free cash flow instead.

⚠️ Revenue grew vs prior year but operating margin contracted. Possible explanations: deliberate investment in growth (hiring, marketing, R&D), input cost inflation, or pricing pressure from competition. Buffett distinguishes between spending that builds moat vs. spending that doesn't.

Peers & Industry

No auto-detected peers for Software - Infrastructure. You can manually compare FTNT against any stock using the Compare tool.

"The management of a business is its most important single factor — more important than market position, patents, or financial structure."

— Benjamin Graham

Capital Allocation & Alignment

Insider Ownership

17.39%

High — management has strong skin in the game

Return on Equity (ROE)

54.0%

Excellent — management generates strong returns on equity

Return on Assets (ROA)

5.4%

Strong — management uses assets efficiently

Share Buybacks (Latest Year)

$2.3B

Management is returning capital to shareholders via buybacks

Debt Trend YoY

-50.1% YoY

Debt is declining — management is deleveraging

Leadership Team

Ken Xie

Co-Founder, Chairman & CEO

Age 62

Pay: $1,302,937

0.244% of net income

Michael Xie

Co-Founder, President, CTO & Director

Age 56

Pay: $773,876

0.145% of net income

Christiane Ohlgart

Chief Accounting Officer, CFO and Principal Financial & Accounting Officer

Age 57

Pay: $774,515

0.145% of net income

John Whittle

Chief Operating Officer

Age 56

Pay: $960,000

0.180% of net income

Anthony Luscri

Vice President of Investor Relations

Top Institutional Holders

Institution	% Owned	Shares
Blackrock Inc.	8.46%	61,968,733
Vanguard Capital Management LLC	5.43%	39,754,778
State Street Corporation	3.95%	28,929,635
Vanguard Portfolio Management LLC	3.42%	25,037,687
Geode Capital Management, LLC	2.38%	17,461,777
Bank Of New York Mellon Corporation	1.82%	13,333,083
First Trust Advisors LP	1.57%	11,506,173
Invesco Ltd.	1.37%	10,005,263

Risk Analysis

Beta (Market Risk)

1.11

Moderate volatility — moves slightly more than market

Short Interest

2.8% of float

Low short interest — market is not heavily bearish

Debt-to-Equity

0.57x

Conservative balance sheet — low financial risk

Current Ratio

1.15x

Adequate liquidity

52-Week Price Range

Low: $70.12 Current: $144.73 High: $150.07

Currently at 93% of 52-week range

Fortinet, Inc.

Metric Explanations

Full Graham Analysis

Income Highlights

Balance Sheet Highlights

Cash Flow Highlights

Quarter vs Same Quarter Last Year

Quarterly Health Checks

Operating Cash Flow

ROIC

Market Cap / Net Assets

Peers & Industry

Capital Allocation & Alignment

Leadership Team

Top Institutional Holders

Risk Analysis