Shares of leading cybersecurity juggernaut Fortinet (NASDAQ: FTNT) were down 8% as of 1:15 p.m. ET on Thursday, according to data provided by S&P Global Market Intelligence.
The next-gen firewall specialist reported first-quarter earnings on Wednesday and delivered 14% sales growth alongside record-setting free cash flow (FCF).
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
However, with the company trading at 44 times FCF prior to earnings, the market expected perfection from Fortinet, and management’s guidance didn’t live up to these hopes.
90 days’ worth of information doesn’t erase Fortinet’s dominance
While Fortinet met analysts’ expectations for Q1, its guidance for 13% sales growth and a mere 4% increase in adjusted earnings per share in the upcoming quarter spooked the market.
In my opinion, this is a classic case of a market-beating stock priced for perfection delivering “adequate” earnings. Nothing was really “wrong” with earnings or guidance, but it wasn’t perfect.
Image source: Getty Images.
As always, it’s crucial to look beyond what Fortinet’s potential numbers could be over the next 90 days and focus on its long-term investment thesis. Fortinet is:
No. 1 in firewalls deployed globally
Ranked No. 7 on Forbes’ list of most trustworthy companies
Used by 80% of the Fortune 100 and 72% of the Global 2000
A Gartner Magic Quadrant leader in firewalls, SD-WAN, and wired and wireless LAN
A Gartner Magic Quadrant challenger in its nascent Secure Access Security Edge (SASE) and Security Service Edge (SSE) business lines
Founder and CEO Ken Xie summed up Fortinet’s moat during the earnings call, saying, “We remain the only vendor to have organically developed all of the core SASE capabilities within a single operating system, FortiOS.”
With its up-and-coming SSE and Unified SASE solutions growing billings by 110% and 18% in Q1, Fortinet’s growth story should have many chapters remaining.
Should you invest $1,000 in Fortinet right now?
Before you buy stock in Fortinet, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Fortinet wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $623,103!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $717,471!*
Now, it’s worth noting Stock Advisor’s total average return is 909% — a market-crushing outperformance compared to 162% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of May 5, 2025
Josh Kohn-Lindquist has positions in Fortinet. The Motley Fool has positions in and recommends Fortinet. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.
