Fortinet (FTNT): This Stock is on the Verge of a Breakout

A key resistance level has formed in the chart of Fortinet (FTNT).  If this level is surpassed, a breakout could occur…

Fortinet (FTNT) is a cybersecurity vendor that sells products, support, and services to small and midsize businesses, enterprises, and government entities. Its products include unified threat management appliances, firewalls, network security, and its security platform, Security Fabric.

The coronavirus pandemic resulted in many people working from home. This required cloud computing services to enable much of that work, and FTNT’s firewall protected data centers that powered the cloud. This led to a 14% year-over-year rise in third quarter product revenue. The company’s service revenue was also up 22% year over year.

FTNT had $1.7 billion in cash as of the end of the last quarter, and has a current ratio of 1.5, indicating it has plenty of liquidity on hand to cover short-term debt. The company is also highly profitable with a net profit margin of 18.4%.

As mentioned earlier, revenue growth has been strong over the past year. Earnings are also up quite a bit over the past five years, with an average rise of 117.9%. With that much growth, the stock is trading at a high multiple, as expected. It has a trailing P/E of 54.01.

The stock has shown bullish long-term momentum, but mixed short-term performance. This has led to a Momentum Grade of C in our POWR Ratings system.

Take a look at the 1-year chart of FTNT below with my added notations…

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