Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Fortinet, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 11.7% to 6.8% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 94, DPO 67, DIO 105). At a 9.2% WACC with mid-year discounting, the terminal value (91% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 27.7x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $96.41 per share, suggesting FTNT is undervalued by 19.8% at the current price of $80.47.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 1,879 | 2,076 | 2,266 | 2,750 | 2,936 | 3,010 |
| (−) Net Interest | 29 | 32 | 34 | 42 | 45 | 46 |
| (+) D&A | 305 | 339 | 386 | 458 | 520 | 533 |
| EBITDA | 2,213 | 2,447 | 2,687 | 3,250 | 3,500 | 3,588 |
| (−) Tax | 188 | 208 | 227 | 275 | 294 | — |
| (−) CapEx | 468 | 517 | 564 | 685 | 731 | — |
| (−) ΔWC | 270 | 222 | 215 | 549 | 211 | — |
| Free Cash Flow (FCF) | 1,287 | 1,500 | 1,680 | 1,742 | 2,265 | — |
| Peers' EBITDA Multiple | 27.7x | |||||
| Terminal Value | 99,385 | |||||
| WACC / Discount Rate | 9.23% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 1,231 | 1,314 | 1,348 | 1,279 | 1,522 | 63,930 |
| Enterprise Value | 70,624 | |||||
| Projection Period | 6,694 | 9.5% | ||||
| Terminal Value | 63,930 | 90.5% | ||||
| (−) Current Net Debt | (1,499) | |||||
| Equity Value | 72,123 | |||||
| (÷) Outstanding Shares | 748M | |||||
| Fair Price | $96 | +19.8% | ||||
| WACC \ EV/EBITDA Exit Multiple | 23.7x | 25.7x | 27.7x | 29.7x | 31.7x |
|---|---|---|---|---|---|
| 7.2% | $92 | $98 | $105 | $112 | $119 |
| 8.2% | $88 | $94 | $101 | $107 | $114 |
| 9.2% | $84 | $90 | $96 | $103 | $109 |
| 10.2% | $81 | $87 | $92 | $98 | $104 |
| 11.2% | $77 | $83 | $89 | $94 | $100 |
Current price: $80.47. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.