Fortinet (FTNT) vs. Radcom (RDCM) Financial Analysis

Fortinet (NASDAQ: FTNT) and Radcom (NASDAQ:RDCM) are both computer and technology companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, institutional ownership, valuation, analyst recommendations, risk, profitability and earnings.

Institutional & Insider Ownership

69.6% of Fortinet shares are held by institutional investors. Comparatively, 23.7% of Radcom shares are held by institutional investors. 17.7% of Fortinet shares are held by insiders. Comparatively, 69.0% of Radcom shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Fortinet and Radcom’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Fortinet $1.49 billion 7.12 $31.39 million $0.52 121.71
Radcom $37.23 million 7.60 $2.90 million $0.23 90.87

Fortinet has higher revenue and earnings than Radcom. Radcom is trading at a lower price-to-earnings ratio than Fortinet, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Fortinet and Radcom, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fortinet 1 12 11 0 2.42
Radcom 0 0 2 0 3.00

Fortinet presently has a consensus price target of $54.50, suggesting a potential downside of 13.89%. Radcom has a consensus price target of $27.00, suggesting a potential upside of 29.19%. Given Radcom’s stronger consensus rating and higher possible upside, analysts clearly believe Radcom is more favorable than Fortinet.

Volatility and Risk

Fortinet has a beta of 0.76, meaning that its share price is 24% less volatile than the S&P 500. Comparatively, Radcom has a beta of 0.62, meaning that its share price is 38% less volatile than the S&P 500.

Profitability

This table compares Fortinet and Radcom’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fortinet 4.01% 14.64% 4.83%
Radcom 8.88% 5.94% 4.90%

Summary

Fortinet beats Radcom on 8 of the 14 factors compared between the two stocks.

Fortinet Company Profile

Fortinet, Inc. provides broad, automated, and integrated cybersecurity solutions worldwide. It offers FortiGate hardware and software licenses that provide various security and networking functions, including firewall, intrusion prevention, anti-malware, virtual private network, application control, Web filtering, anti-spam, and WAN acceleration; and FortiSandbox technology that delivers proactive detection and mitigation services; and FortiSIEM family of products, which offers a cloud-ready security information and event management solution for enterprises and service providers. The company also provides FortiSwitch product family that offers secure switching solutions for connecting customers end devices, such as computers and laptops, as well as an expanding field of Internet of Things devices; and Fortinet Management and Analysis products consisting of FortiManager and FortiAnalyzer hardware and software products. In addition, it provides security subscription, technical support, professional, and training services. The company sells its security solutions to channel partners; and directly to end-customers, including small and medium-sized businesses, large enterprises, and government organizations in a range of industries consisting of telecommunications, technology, government, financial services, education, retail, manufacturing, and healthcare. Fortinet, Inc. was founded in 2000 and is headquartered in Sunnyvale, California.

Radcom Company Profile

RADCOM Ltd. provides service assurance and customer experience management solutions for communication service providers (CSPs). Its carrier-grade solutions support mobile and fixed networks, and scale to terabit data bandwidths to enable data analytics. The company offers solutions for virtualized infrastructure and next-generation networks. Its product line includes the MaveriQ, a next-generation probe-based customer and service assurance solution that enables CSPs to carry out end-to-end voice and data quality monitoring, manage their networks and services, and monitor their roaming and interconnect traffic. The company's MaveriQ solution also provides service assurance monitoring applications, including network troubleshooting and quality monitoring, service quality monitoring, customer experience management, customer quality of service monitoring, and customer service level agreements monitoring. In addition, it offers Network Visibility, an automated network function virtualization orchestration solution for onboarding and configuration that enables traffic distribution, load balancing, and end-to-end visibility across virtual networks, as well as provides packet broker capabilities, like packet de-duplication, secure socket layer decryption, and packet slicing. Further, it provides Network Insights, which offers CSPs with full network visibility that allows them to locate and resolve any performance issues. The company sells its products directly, as well as through a network of independent distributors and resellers, and independent representatives worldwide. The company was formerly known as Big Blue Catalogue Ltd. and changed its name to RADCOM Ltd. in 1989. RADCOM Ltd. was founded in 1985 and is headquartered in Tel Aviv, Israel.

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