Should You Buy Fortinet Stock Before July 29 Q2 Earnings?
Fortinet carries a streak no other cybersecurity company has matched, a buyback program that dwarfs most dividends, and a firewall refresh cycle that just posted explosive growth. The question is whether Wednesday's Q2 report extends the run or ends it.
Fortinet (NASDAQ:FTNT | FTNT Price Prediction) heads into Wednesday’s Q2 earnings report with a record few cybersecurity companies can match: 24th consecutive quarter without an earnings miss. The business is generating record free cash flow, and is running a buyback program large enough to function as a de facto dividend. Here are 3 reasons this cybersecurity giant looks appealing ahead of earnings:
Product Revenue Just Accelerated 41%
Fortinet’s Product revenue reaccelerated to +41% YoY in Q1, and billings jumped 31%, signaling the firewall refresh cycle around FortiOS 8.0 and the FortiGate G Series is live.
In addition, management raised FY26 guidance to $7.71B–$7.87B revenue and $3.10–$3.16 in non-GAAP EPS. The company’s Q1 earnings report drove a +28.17% 30-day move against the S&P 500’s +0.75%, which demonstrates how a strong report on Wednesday could elicit a meaningful market reaction.
Fortinet’s $10.25 Billion Share Buyback
In Q1 alone, Fortinet repurchased $823 million of stock. These purchases have proven to be well timed, as the stock has since raced forward, and they show the business’s capability to return capital to shareholders.
Today, the company sits on a $10.25 billion total share repurchase authorization after a $1.0 billion board raise, and produced record free cash flow of $1.006 billion (+26.32% YoY) to fund it. The company’s net debt to EBITDA sits at -0.67, so the balance sheet has ample room to fund the buybacks directly.
Fortinet’s Valuation Looks Reasonable Compared to Palo Alto
Cybersecurity companies are known for trading at high multiples, but Fortinet looks reasonably valued compared to peers. The stock trades at a forward P/E of 52x against a business compounding at roughly 15% YoY revenue growth with a 31.3% operating margin and a 27.5% net margin. A competitor, Palo Alto Networks (NASDAQ:PANW), trades at a forward P/E of 78x with a TTM operating margin of -2.47%.
Strong Execution Is Offsetting Supply-Chain Pressure
The bear case is valuation and lingering supply-chain risk. Both were the exact concerns cited by the last analyst downgrade, and both were answered in the same quarter Fortinet posted 41% product revenue growth and $1.01 billion of free cash flow. CEO Ken Xie framed it directly, noting the company’s “direct operations, manufacturing model and strong execution turn supply chain challenges into opportunities to gain market share.”
If the firewall refresh cycle continues, Fortinet can use its growing cash flow and $10.25 billion authorization to repurchase more shares. That combination gives long-term investors two potential return drivers: continued business growth and a steadily declining share count.
Contact [email protected] for any questions or corrections.
Thomas Richmond is a financial writer and content strategist with 5+ years of experience covering stocks and financial markets. He has published over 250 articles focused on individual stock analysis, helping investors better understand business fundamentals, stock valuations, and long-term opportunities.
Thomas previously served as a Content Lead at TIKR, a stock research platform, where he helped scale the company’s blog to hundreds of articles per month and contributed to a weekly newsletter reaching more than 100,000 investors.
He specializes in breaking down complex companies into clear, actionable insights for everyday investors, with a focus on fundamentals-driven research.
His work has also been featured on platforms including Seeking Alpha and Sure Dividend.
Outside of work, Thomas enjoys weight lifting and soccer.
