DCF Studio

    FTNT · NMS · Technology

    Fortinet, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 52.21

    Market price

    USD 126.21

    Implied upside

    -58.6%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    AdjustedCapital expenditure runs at 5.5% of revenue against depreciation of 2.2%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Current EV/EBITDA of 40.3x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 52.21-58.6%
    Exit multiple
    USD 71.50-43.3%
    Market price
    USD 126.21

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn2bn3bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 8.2bnUSD 9.1bnUSD 10.1bnUSD 11.0bnUSD 11.9bnUSD 12.7bnUSD 13.5bnUSD 14.1bnUSD 14.6bnUSD 15.0bn+7.0%
    EBITUSD 2.2bnUSD 2.4bnUSD 2.7bnUSD 2.9bnUSD 3.2bnUSD 3.4bnUSD 3.6bnUSD 3.8bnUSD 3.9bnUSD 4.0bn+7.0%
    NOPATUSD 1.9bnUSD 2.1bnUSD 2.3bnUSD 2.6bnUSD 2.8bnUSD 3.0bnUSD 3.1bnUSD 3.3bnUSD 3.4bnUSD 3.5bn+7.0%
    Add depreciation & amortisationUSD 179.7mUSD 200.5mUSD 221.4mUSD 241.9mUSD 261.6mUSD 280.0mUSD 296.5mUSD 310.6mUSD 321.9mUSD 329.9m+7.0%
    Less capital expenditureUSD -448.3mUSD -471.7mUSD -489.5mUSD -500.7mUSD -504.5mUSD -500.3mUSD -487.8mUSD -467.1mUSD -438.5mUSD -402.7m-1.2%
    Capex, % of revenue5.5%5.2%4.9%4.6%4.2%3.9%3.6%3.3%3.0%2.7%-
    Less increase in working capitalUSD -387.3mUSD -266.0mUSD -267.7mUSD -263.5mUSD -252.9mUSD -235.6mUSD -211.5mUSD -181.0mUSD -144.6mUSD -103.2m-13.7%
    Free cashflow to firmUSD 1.2bnUSD 1.6bnUSD 1.8bnUSD 2.0bnUSD 2.3bnUSD 2.5bnUSD 2.7bnUSD 3.0bnUSD 3.2bnUSD 3.3bn+11.5%
    Discount factor0.95700.87650.80270.73520.67330.61660.56470.51720.47370.4338-
    Present valueUSD 1.2bnUSD 1.4bnUSD 1.5bnUSD 1.5bnUSD 1.5bnUSD 1.5bnUSD 1.5bnUSD 1.5bnUSD 1.5bnUSD 1.4bn-
    Present Value Of The ForecastUSD 14.6bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta1.027Reported 1.040, pulled toward 1.0 (Blume)
    Cost of equity9.24%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 103.7x interest cover. Book interest / average debt was lower, at 2.0%.
    Market capitalisationUSD 92.7bn98.9% of capital
    Total debtUSD 996.3m1.1% of capital, book value as a proxy
    Tax rate12.3%Effective, capped at statutory
    WACC9.19%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 52.21

    61% of EV

    Forecast FCFF, final year
    USD 3.3bn
    Capex at depreciation, working capital in reinvestment
    USD 3.6bn
    Less reinvestment at g/ROIC (4.2% of NOPAT)
    USD -148.5m
    Capitalised
    USD 3.4bn
    ROIC (reported)
    60.0%
    Terminal value, undiscounted
    USD 52.3bn
    Terminal value, discounted
    USD 22.7bn
    Enterprise value
    USD 37.3bn
    Less net debt
    USD -2.6bn
    Equity value
    USD 39.9bn

    Exit at 20.0x EBITDA

    Value per shareUSD 71.50

    72% of EV

    Terminal value, undiscounted
    USD 86.3bn
    Terminal value, discounted
    USD 37.5bn
    Enterprise value
    USD 52.1bn
    Less net debt
    USD -2.6bn
    Equity value
    USD 54.7bn

    Spread between methods: 31%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.19%66.5870.3574.9380.6387.90
    8.19%56.2958.7061.5564.9669.11
    9.19%48.7350.3452.2154.3956.97
    10.19%42.9544.0645.3446.8048.49
    11.19%38.3939.1940.0841.0942.24

    Outlined: this model. Green text: above today's price of 126.21. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year15.5%8.2%20.2%
    EBIT margin30.7%26.6%64.5%
    Discount rate-9.2%5.3%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.