Dj Fortinet Inc. Stock Underperforms Friday When Compared To Competitors

For those looking to find strong Computer and Technology stocks, it is prudent to search for companies in the group that are outperforming their peers. Has Fortinet (FTNT) been one of those stocks this year? By taking a look at the stock's year-to-date performance in comparison to its Computer and Technology peers, we might be able to answer that question.

Fortinet is a member of our Computer and Technology group, which includes 619 different companies and currently sits at #2 in the Zacks Sector Rank. The Zacks Sector Rank considers 16 different sector groups. The average Zacks Rank of the individual stocks within the groups is measured, and the sectors are listed from best to worst.

The Zacks Rank is a proven model that highlights a variety of stocks with the right characteristics to outperform the market over the next one to three months. The system emphasizes earnings estimate revisions and favors companies with improving earnings outlooks. Fortinet is currently sporting a Zacks Rank of #1 (Strong Buy).

The Zacks Consensus Estimate for FTNT's full-year earnings has moved 9.4% higher within the past quarter. This means that analyst sentiment is stronger and the stock's earnings outlook is improving.

Based on the most recent data, FTNT has returned 60.6% so far this year. Meanwhile, the Computer and Technology sector has returned an average of 28.3% on a year-to-date basis. As we can see, Fortinet is performing better than its sector in the calendar year.

One other Computer and Technology stock that has outperformed the sector so far this year is Innovid Corp. (CTV). The stock is up 100.7% year-to-date.

The consensus estimate for Innovid Corp.'s current year EPS has increased 36.4% over the past three months. The stock currently has a Zacks Rank #1 (Strong Buy).

Looking more specifically, Fortinet belongs to the Internet - Software industry, which includes 145 individual stocks and currently sits at #35 in the Zacks Industry Rank. On average, stocks in this group have gained 31.7% this year, meaning that FTNT is performing better in terms of year-to-date returns. Innovid Corp. is also part of the same industry.

Fortinet and Innovid Corp. could continue their solid performance, so investors interested in Computer and Technology stocks should continue to pay close attention to these stocks.

Zacks Investment Research

Zoom Video Communications ZM is slated to release its third-quarter fiscal 2025 results on Nov. 25.

Zoom expects third-quarter fiscal 2025 revenues between $1.162 billion and $1.165 billion. The Zacks Consensus Estimate for the top line is currently pegged at $1.16 billion, indicating growth of 2.34% from the year-ago quarter.

Non-GAAP earnings per share are expected in the range of $1.29-$1.31. The consensus mark for earnings has remained steady at $1.31 per share over the past 30 days, indicating growth of 1.55% year over year.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Factors to Note

The company's fiscal third-quarter performance is likely to have benefited from enhancements in its products, such as Zoom Video Webinars, Visitor Management, Workplace Reservation and Zoom Rooms. Zoom’s new Webinar’s capability to host 1 million attendees demonstrates scalability and is expected to drive the top line and active user growth in the third quarter of fiscal 2025.

Zoom Video Communications, Inc. Price and EPS Surprise

Zoom Video Communications, Inc. price-eps-surprise | Zoom Video Communications, Inc. Quote

ZM's increasing range of solutions is expected to have contributed to customer growth. ZM’s launch of Zoom Docs is expected to have driven customer momentum by expanding offerings across the productivity lifecycle and enabling the transformation of information from a Zoom Meeting into tasks and documents.

The company’s advancements and partnerships related to artificial intelligence (AI) in the fiscal third quarter are noteworthy. ZM announced enhancements of its AI features within the Zoom Workplace, aiming to boost team productivity and collaboration. Enhanced capabilities of Zoom Meetings, Zoom Team Chat and Zoom Phone are expected to have driven customer satisfaction and topline in the to-be-reported quarter.

The company’s Contact Center package offering, driven by AI capabilities, is expected to have benefited ZM’s prospects in the to-be-reported quarter by allowing users to increase efficiency by integrating solutions across platforms.

Zoom Workvivo’s Meta partnership and increasing popularity in reselling partners is expected to have benefited Zoom’s prospects in the third quarter of fiscal 2025.

Zoom’s AI Companion is expected to have driven active user growth due to its capability to enhance productivity and capability by leveraging generative AI. At the end of the second quarter of fiscal 2025, Zoom AI Companion had a reach of 1.2 million accounts. Positive momentum is expected in the to-be-reported quarter as well.

These efforts are expected to have boosted the adoption of the company’s solution among enterprise customers. The consensus estimate for enterprise customers in the fiscal third quarter is currently pegged at 196,459.

Zoom Video’s freemium business model helps it win customers rapidly, whom it can later convert into paying customers. In the fiscal second quarter, customers contributing more than $100,000 in revenues in the trailing 12 months grew 7.1% to 3,933. These customers accounted for 31% of revenues, up from 29% in the year-ago quarter. The momentum is expected to have continued in the to-be-reported quarter.

The Zacks Consensus Estimate for customers contributing more than $100,000 in revenues is currently pegged at 4,042 for the third quarter fiscal 2025.

However, ZM has been facing significant competition from Cisco, Microsoft and Google Meet. This might have led to a loss in small and medium-sized business customers, which is likely to have hurt top-line growth.

International expansion has been causing cost escalations in the form of development expenses. This trend is likely to have continued in the to-be-reported quarter as the company plans to add local sales support in international markets.

What Our Model Unveils

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

ZM has an Earnings ESP of 0.00% and sports a Zacks Rank #2 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some stocks, which according to our model, have the right combination of elements.

Fortinet FTNT has an Earnings ESP of +4.78% and carries a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for the company’s long-term earnings is pegged at $17.8 per share. Shares of FTNT have returned 60.7% in the year-to-date period.

Meta Platforms META has an Earnings ESP of +0.96% and a Zacks Rank #2 at present.

The Zacks Consensus Estimate for the company’s long-term earnings is pegged at $20.1 per share. Shares of META have returned 58.7% in the year-to-date period.

Reddit Inc. RDDT has an Earnings ESP of +10.57% and carries a Zacks Rank #2 at present.

The Zacks Consensus Estimate for the company’s long-term earnings is pegged at $36 per share. Shares of RDDT have returned 193.5% in the year-to-date period.

Zacks Investment Research

Intuit INTU reported first-quarter fiscal 2025 non-GAAP earnings of $2.5 per share, which beat the Zacks Consensus Estimate by 5.93%. The bottom line jumped 1.2% from the year-ago quarter.

Intuit’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 13.09%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Revenues of $3.28 billion beat the consensus mark by 4.58% and increased 10% year over year.

Quarter Details

Global Business Solution revenues (77.49% of total revenues) grew 8.53% year over year to $2.54 billion, beating the Zacks Consensus Estimate by 1.62%. Within the segment, total Online Ecosystem revenues climbed 20% year over year to $1.94 billion.

QuickBooks Online Accounting revenues were up 21% year over year to $965 million, driven primarily by customer growth, higher effective prices and a mix-shift to INTU’s full-service offering, beating the Zacks Consensus Estimate by 1.15%.

Online Services revenues, which include payroll, payments, time tracking and capital, jumped 19% year over year to $978 million. This was driven by a strong performance from Mailchimp, payroll and money offering.

Intuit Inc. Price, Consensus and EPS Surprise

Intuit Inc. price-consensus-eps-surprise-chart | Intuit Inc. Quote

Total international online revenues increased 10% year over year on a constant-currency basis.

Total Desktop Ecosystem revenues declined 17% year over year during the reported quarter to $601 million, beating the Zacks Consensus Estimate by 3.24%.

Revenues from the Consumer Group (5.36% of total revenues) decreased 5.9% to $176 million, beating the Zacks Consensus Estimate by 2.81%.

Further, ProTax Group's professional tax revenues (1.19% of total revenues) declined 7.14% year over year to $39 million, beating the Zacks Consensus Estimate by 0.47%.

The Credit Karma business contributed $524 million to Intuit’s fiscal first-quarter total revenues, which increased 29.38% year over year, beating the Zacks Consensus Estimate by 22.34%. The increase was driven by strength in credit card verticals, auto insurance and personal loans.

INTU’s non-GAAP operating income declined 1% to $953 million. Non-GAAP operating margin contracted 320 basis points to 29% year over year.

Balance Sheet and Cash Flow

As of Oct. 31, 2024, Intuit’s cash and investments were $3.4 billion compared with $4.1 billion as of July 31, 2024.

The company exited the fiscal first quarter with a long-term debt of $5.625 billion.

Intuit repurchased $570 million of stock during the first quarter of fiscal 2025, with $4.3 billion remaining in total share repurchase authorization.

INTU announced that its board approved a quarterly dividend of $1.04 per share, to be paid on Jan. 17, 2025. The newly approved dividend represents a year-over-year increase of 16%.

Outlook

For the second quarter of fiscal 2025, INTU expects revenues to grow between 13% and 14% on a year-over-year basis in the range of $3.812 billion and $3.845 billion. Non-GAAP earnings for the quarter are estimated in the range of $2.55-$2.61 per share.

Intuit projects fiscal 2025 revenues in the band of $18.160-$18.347 billion, indicating 12-13% growth.

The company anticipates non-GAAP operating income between $7.241 billion and $7.316 billion.

Intuit expects fiscal 2024 non-GAAP earnings per share between $19.16 and $19.36.

Zacks Rank & Key Picks

Intuit carries a Zacks Rank #3 (Hold) at present. Shares of INTU have gained 3.4% in the year-to-date period compared with the Zacks Computer – Software industry’s return of 16.5%.

Some better-ranked stocks from the broader Computer and Technology sector are Fortinet FTNT, Meta Platforms META and Reddit Inc. RDDT. Fortinet sports a Zacks Rank #1 (Strong Buy), while Meta Platforms and Reddit Inc. carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fortinet shares have returned 60.7% in the year-to-date period.

The Zacks Consensus Estimate for the company’s long-term earnings is pegged at $17.8 per share.

Meta Platforms shares have returned 58.7% in the year-to-date period.

The Zacks Consensus Estimate for the company’s long-term earnings is pegged at $20.1 per share.

Reddit Inc. shares have returned 213.3% in the year-to-date period.

The Zacks Consensus Estimate for the company’s long-term earnings is pegged at $36 per share.

Zacks Investment Research