As of May 24, 2025, Fortinet Inc's estimated intrinsic value ranges from $21.00 to $93.31 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $93.31 | -9.6% |
| Discounted Cash Flow (5Y) | $77.40 | -25.0% |
| Dividend Discount Model (Multi-Stage) | $69.86 | -32.3% |
| Dividend Discount Model (Stable) | $87.75 | -14.9% |
| Earnings Power Value | $21.00 | -79.6% |
Is Fortinet Inc (FTNT) undervalued or overvalued?
With the current market price at $103.16, the stock appears to be significantly overvalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Fortinet Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.57 | 0.87 |
| Cost of equity | 6.5% | 9.7% |
| Cost of debt | 5.0% | 5.0% |
| Tax rate | 7.2% | 10.2% |
| Debt/Equity ratio | 0.01 | 0.01 |
| After-tax WACC | 6.5% | 9.7% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $77 | $56,591M | 83.8% |
| 10-Year Growth | $93 | $68,750M | 70.9% |
| 5-Year EBITDA | $53 | $38,234M | 76.1% |
| 10-Year EBITDA | $67 | $48,510M | 58.8% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $1,042M |
| Discount Rate (WACC) | 9.7% - 6.5% |
| Enterprise Value | $10,764M - $16,154M |
| Net Debt | $(2,602)M |
| Equity Value | $13,366M - $18,756M |
| Outstanding Shares | 765M |
| Fair Value | $17 - $25 |
| Selected Fair Value | $21.00 |
| Metric | Value |
|---|---|
| Market Capitalization | $78887M |
| Enterprise Value | $76286M |
| Trailing P/E | 41.98 |
| Forward P/E | 36.36 |
| Trailing EV/EBITDA | 11.00 |
| Current Dividend Yield | 0.00% |
| Dividend Growth Rate (5Y) | 0.00% |
| Debt-to-Equity Ratio | 0.01 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $27.99 |
| Discounted Cash Flow (5Y) | 25% | $19.35 |
| Dividend Discount Model (Multi-Stage) | 20% | $13.97 |
| Dividend Discount Model (Stable) | 15% | $13.16 |
| Earnings Power Value | 10% | $2.10 |
| Weighted Average | 100% | $76.58 |
Based on our comprehensive valuation analysis, Fortinet Inc's weighted average intrinsic value is $76.58, which is approximately 25.8% below the current market price of $103.16.
Key investment considerations:
Given these factors, we believe Fortinet Inc is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.