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

Investors are on the lookout for growth stocks that can deliver above-average financial growth, catching the market's eye and offering exceptional returns. However, identifying a growth stock that truly meets these expectations can be challenging.

Growth stocks are often more volatile and come with higher risks, and there's a chance of losing money if a stock's growth story is nearing its conclusion.

The Zacks Growth Style Score system simplifies the process of finding promising growth stocks by evaluating a company's genuine growth potential beyond conventional metrics.

One such stock currently recommended is Fortinet (FTNT). This network security company not only boasts a robust Growth Score but also holds a top Zacks Rank, indicating strong performance.

Research shows that stocks with superior growth characteristics tend to outperform the market consistently. Returns are even more impressive for stocks that combine a Growth Score of A or B with a Zacks Rank #1 (Strong Buy) or #2 (Buy).

Earnings Growth

Earnings growth is arguably the most critical factor for investors, as it signifies a company's ability to increase profits. For growth investors, double-digit earnings growth is especially appealing, suggesting promising future prospects and potential stock price increases.

Fortinet has a historical EPS growth rate of 42%, which is impressive. However, the projected EPS growth for this year is even more noteworthy at 33.6%, surpassing the industry average of 30.1%.

Cash Flow Growth

Cash flow is vital for any business, but for growth-oriented companies, rapid growth in cash flow is crucial. It allows these companies to expand without relying on costly external funding.

Currently, Fortinet's year-over-year cash flow growth stands at 34.6%, significantly higher than many competitors. This rate is also remarkable compared to the industry's average decline of 14.4%.

Besides the current cash flow growth, examining historical rates can provide context. Fortinet has achieved an annualized cash flow growth rate of 34.5% over the past 3-5 years, well above the industry average of 15.2%.

Promising Earnings Estimate Revisions

Additionally, the trend in earnings estimate revisions provides further evidence of Fortinet's strength. A positive trend often correlates with favorable stock price movements.

Recently, there have been upward revisions in Fortinet's earnings estimates, with the Zacks Consensus Estimate for the current year climbing by 7.8% over the past month.

Bottom Line

The earnings estimate revisions have elevated Fortinet's status to a Zacks Rank #1 stock, along with a solid Growth Score of B based on various factors, including those discussed above.

Fortinet is therefore positioned as a strong candidate for growth investors looking for potential outperformers in the market.

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