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Fortinet (FTNT) to Post Q1 Earnings: What's in the Offing?
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Fortinet, Inc. (FTNT - Free Report) is set to report first-quarter 2020 results on May 6.
For the quarter, the company anticipates revenues of $555-$565 million. The Zacks Consensus Estimate for revenues is pegged at $566.44 million, implying growth of 19.86% from the figure reported in the year-ago quarter.
Non-GAAP earnings per share are envisioned to be 50-52 cents. The Zacks Consensus Estimate is pegged at 51 cents per share, indicating an increase of 10.87% from the figure reported in the year-ago quarter.
The company’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 16.32%.
Let’s see how things are shaping up for the upcoming announcement.
Fortinet’s first-quarter performance is expected to have benefited from strong momentum in FortiGate virtual machines, which is driving its private and public cloud billings.
Moreover, in an effort to contain the coronavirus's spread, a huge global workforce is working remotely. But more people logging into employers' networks means a greater need for security. This trend might have had a positive impact on demand for Fortinet’s products in the first quarter.
The rapid adoption of FortiGate-based secure SD-WAN offerings is likely to have positively impacted the company’s Product segment. The Zacks Consensus Estimate for Product revenues in the first quarter stands at $184 million, suggesting 12.9% year-over-year growth.
Also, FortiGuard security subscriptions and FortiCare technical support services are expected to have maintained solid traction, boosting the company’s Services segment. The Zacks Consensus Estimate for Services revenues in the first quarter stands at $376 million, suggesting 21.3% year-over-year growth.
Besides, the company might have continued to benefit from its IoT offering with the Forti- ASIC SPU technology, which provides a cost and performance advantage over its competitors.
However, a 100 basis point headwind on the operating margin due to two acquisitions in October and December last year is expected to have been an overhang, as projected by the company in its last earnings call.
Moreover, capital expenditures between $25 million and $35 million, including expenditure on campus expansion, are expected to have weighed on margins in the first quarter.
What Our Model Says
The proven Zacks model does not conclusively predict an earnings beat for Fortinet this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. 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 has an Earnings ESP of -0.99% and a Zacks Rank #3.
Stocks to Consider
Here are a few stocks you may consider, as our model shows that these have the right combination of elements to beat on earnings this season:
AMETEK, Inc. (AME - Free Report) has an Earnings ESP of +0.20% and a Zacks Rank #3.
Dynatrace, Inc. (DT - Free Report) has an Earnings ESP of +2.13% and a Zacks Rank #3.
Arista Networks, Inc. (ANET - Free Report) has an Earnings ESP of +0.18% and a Zacks Rank of 3.
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Bigstock
Fortinet (FTNT) to Post Q1 Earnings: What's in the Offing?
Fortinet, Inc. (FTNT - Free Report) is set to report first-quarter 2020 results on May 6.
For the quarter, the company anticipates revenues of $555-$565 million. The Zacks Consensus Estimate for revenues is pegged at $566.44 million, implying growth of 19.86% from the figure reported in the year-ago quarter.
Non-GAAP earnings per share are envisioned to be 50-52 cents. The Zacks Consensus Estimate is pegged at 51 cents per share, indicating an increase of 10.87% from the figure reported in the year-ago quarter.
The company’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 16.32%.
Let’s see how things are shaping up for the upcoming announcement.
Fortinet, Inc. Price and EPS Surprise
Fortinet, Inc. price-eps-surprise | Fortinet, Inc. Quote
Factors at Play
Fortinet’s first-quarter performance is expected to have benefited from strong momentum in FortiGate virtual machines, which is driving its private and public cloud billings.
Moreover, in an effort to contain the coronavirus's spread, a huge global workforce is working remotely. But more people logging into employers' networks means a greater need for security. This trend might have had a positive impact on demand for Fortinet’s products in the first quarter.
The rapid adoption of FortiGate-based secure SD-WAN offerings is likely to have positively impacted the company’s Product segment. The Zacks Consensus Estimate for Product revenues in the first quarter stands at $184 million, suggesting 12.9% year-over-year growth.
Also, FortiGuard security subscriptions and FortiCare technical support services are expected to have maintained solid traction, boosting the company’s Services segment. The Zacks Consensus Estimate for Services revenues in the first quarter stands at $376 million, suggesting 21.3% year-over-year growth.
Besides, the company might have continued to benefit from its IoT offering with the Forti- ASIC SPU technology, which provides a cost and performance advantage over its competitors.
However, a 100 basis point headwind on the operating margin due to two acquisitions in October and December last year is expected to have been an overhang, as projected by the company in its last earnings call.
Moreover, capital expenditures between $25 million and $35 million, including expenditure on campus expansion, are expected to have weighed on margins in the first quarter.
What Our Model Says
The proven Zacks model does not conclusively predict an earnings beat for Fortinet this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. 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 has an Earnings ESP of -0.99% and a Zacks Rank #3.
Stocks to Consider
Here are a few stocks you may consider, as our model shows that these have the right combination of elements to beat on earnings this season:
AMETEK, Inc. (AME - Free Report) has an Earnings ESP of +0.20% and a Zacks Rank #3.
Dynatrace, Inc. (DT - Free Report) has an Earnings ESP of +2.13% and a Zacks Rank #3.
Arista Networks, Inc. (ANET - Free Report) has an Earnings ESP of +0.18% and a Zacks Rank of 3.
You can see the complete list of today’s Zacks #1 Rank stocks here.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>