Is Fortinet (FTNT) a Solid Growth Stock? 3 Reasons to Think "Yes"

Investors often look for growth stocks to benefit from above-average growth in their financial results. These types of stocks can attract significant market interest and lead to remarkable returns. However, identifying a growth stock that can truly reach its potential can be challenging.

Growth stocks usually come with higher volatility and carry above-average risks. An investor could suffer losses if the anticipated growth of a stock is either ending or dwindling.

Lucky for investors, tools like the Zacks Growth Style Score simplify the process of discovering promising growth stocks. This system evaluates a company's actual growth potential beyond traditional metrics.

One stock that stands out is Fortinet (FTNT). Our evaluation shows that the company holds a strong Growth Score and a top Zacks Rank.

Research indicates that stocks with robust growth characteristics tend to outperform the market regularly. Furthermore, stocks with a Growth Score of A or B, combined with a Zacks Rank of #1 (Strong Buy) or #2 (Buy), generally achieve even better returns.

Here are three crucial reasons why Fortinet is an excellent growth pick right now.

Earnings Growth

Nothing is as pivotal as earnings growth; rising profit levels are what most investors aim for. For growth investors, a double-digit earnings growth rate is preferable as it indicates strong future prospects and potential stock price increases.

Fortinet has a historical EPS (earnings per share) growth rate of 42%, but the projected growth is more significant. The company expects its EPS to grow by 33.6% this year, surpassing the industry average of 30.1%.

Cash Flow Growth

Cash flow is vital for any business, and strong cash flow growth is particularly important for growth-focused companies. An increase in cash flow allows these firms to expand operations without relying on costly external financing.

Currently, Fortinet's year-over-year cash flow growth stands at 34.6%, outperforming many peers in the industry where the average is -14.4%.

It's essential to consider not just current cash flow growth, but also its historical growth rate to appreciate the present data better. Over the past 3-5 years, Fortinet has achieved an annualized cash flow growth rate of 34.5%, compared to the industry average of 15.2%.

Promising Earnings Estimate Revisions

The prominence of a stock regarding the metrics discussed earlier can be further confirmed by examining the trends in earnings estimate revisions. An upward trend is preferred, as historical data shows a strong correlation between positive earnings revisions and short-term stock price movements.

Fortinet has recently experienced upward revisions in current-year earnings estimates. The Zacks Consensus Estimate for the current year has increased by 7.8% over the last month.

Bottom Line

The overall positive earnings estimate revisions have propelled Fortinet to a Zacks Rank of #1, and it has received a Growth Score of B based on various factors, including those discussed here.

This combination suggests that Fortinet may outperform the market and presents a solid option for growth investors.

Stocks, Growth, Fortinet