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Fortinet (FTNT) to Post Q2 Earnings: What's in the Cards?

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Fortinet (FTNT - Free Report) is scheduled to report second-quarter 2022 results on Aug 3.

The cybersecurity firm projects revenues between $1.005 billion and $1.035 billion. The Zacks Consensus Estimate for the same is pegged at $1.03 billion, suggesting year-over-year growth of 28%.

At the time of its first-quarter earnings release, the company had anticipated reporting non-GAAP earnings from continuing operations in the range of $1.05 to $1.10 per share. However, considering shareholders’ approval for the company’s planned five-for-one stock split in June 2022, the restated non-GAAP earnings guidance range is forecast at 21-22 cents per share. The Zacks Consensus Estimate stands at 22 cents per share, suggesting growth of 15.8% from the year-ago restated figure of 19 cents.

The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 10.7%.

 

Fortinet, Inc. Price and EPS Surprise Fortinet, Inc. Price and EPS Surprise

Fortinet, Inc. price-eps-surprise | Fortinet, Inc. Quote

Factors to Note

For the April-June quarter, Fortinet anticipates billings in the band of $1.225 billion to $1.265 billion. At the mid-point, this indicates growth of 30%. The heightened demand for its security and networking products amid the post-pandemic reality of remote working and accelerated emergence of digital technologies might have benefited the to-be-reported quarter’s performance.

The rapid adoption of FortiGate-based secure Software-Defined Wide Area Network (SD-WAN) offerings is likely to have supported Fortinet’s Product segment. The Zacks Consensus Estimate for Product revenues in the June-end quarter stands at $392 million, suggesting year-over-year growth of 31.5%.

FortiGuard security subscriptions and FortiCare technical support services are likely to have gained solid traction, favoring the company’s Services segment. The Zacks Consensus Estimate for quarterly Services revenues is pegged at $632 million, indicating a year-over-year improvement of 25.6%.

As one of the broadest security service providers globally, Fortinet’s FortiTrust, a unified solution with a single user-based licensing model for flexible consumption across networks, endpoints and clouds, has been witnessing solid traction. This might have driven the company’s private and public cloud billings as well.

Fortinet’s second-quarter performance is likely to have gained from higher global cybersecurity spending. The growing adoption of SD-WAN solutions might have acted as a tailwind. Per Future Market Insights, the market size for SD-WAN solutions is likely to reach $53.8 billion by 2032 from $3.4 billion in 2022, witnessing a CAGR of 31.6% during 2022-2032.

However, worldwide supply-chain constraints, including the backlog in Fabric products, may have hurt FTNT’s overall second-quarter performance.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Fortinet this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.

Though Fortinet currently carries a Zacks Rank of 3, it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With Favorable Combination

Per our model, MRC Global (MRC - Free Report) , Alcon (ALC - Free Report) and Grocery Outlet (GO - Free Report) have the right combination of elements to post an earnings beat in their upcoming releases.

MRC Global is slated to report second-quarter 2022 results on Aug 8. The company has a Zacks Rank #1 and an Earnings ESP of +30.27% at present. MRC's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 140.8%. You can see the complete list of today's Zacks #1 Rank stocks here.

MRC’s Zacks Consensus Estimate for quarterly earnings is pegged at 25 cents per share, suggesting a whopping year-over-year surge of 212.5%. Its quarterly revenues are estimated to increase 23.4% year over year to $846.5 million.

Alcon has a Zacks Rank #1 and an Earnings ESP of +1.08%. The company is expected to report second-quarter 2022 results on Aug 16. ALC's earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 21.4%.

In the second quarter, Alcon’s Zacks Consensus Estimate for earnings is pegged at 55 cents per share, indicating a 1.8% year-over-year decline. However, revenue is expected to grow 4.4% to $2.19 billion.

Grocery Outlet, which has an Earnings ESP of +5.62%, carries a Zacks Rank #2. The company is likely to report its second-quarter 2022 results on Aug 9. Its earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 4.8%.

The Zacks Consensus Estimate for GO’s second-quarter earnings stands at 24 cents per share, suggesting a year-over-year increase of 4.4%. GO anticipates revenues of $859.6 million, which suggests growth of 10.8% from the year-ago quarter.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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