Yahoo Finance Investors in Fortinet (NASDAQ:FTNT) have seen massive returns of 307% over the past five years
We think all investors should try to buy and hold high quality multi-year winners. And we've seen some truly amazing gains over the years. To wit, the Fortinet, Inc. (NASDAQ:FTNT) share price has soared 307% over five years. And this is just one example of the epic gains achieved by some long term investors. It's also good to see the share price up 15% over the last quarter. But this could be related to the strong market, which is up 9.1% in the last three months.
So let's assess the underlying fundamentals over the last 5 years and see if they've moved in lock-step with shareholder returns.
See our latest analysis for Fortinet
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
During five years of share price growth, Fortinet achieved compound earnings per share (EPS) growth of 31% per year. This EPS growth is reasonably close to the 32% average annual increase in the share price. Therefore one could conclude that sentiment towards the shares hasn't morphed very much. In fact, the share price seems to largely reflect the EPS growth.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
It is of course excellent to see how Fortinet has grown profits over the years, but the future is more important for shareholders. This free interactive report on Fortinet's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Fortinet shareholders are up 8.4% for the year. But that was short of the market average. If we look back over five years, the returns are even better, coming in at 32% per year for five years. Maybe the share price is just taking a breather while the business executes on its growth strategy. It's always interesting to track share price performance over the longer term. But to understand Fortinet better, we need to consider many other factors. For example, we've discovered 2 warning signs for Fortinet (1 doesn't sit too well with us!) that you should be aware of before investing here.
But note: Fortinet may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
