Fortinet FTNT is slated to report second-quarter 2021 results on Jul 29.

For the quarter, the company estimates revenues of $733-$743 million. The Zacks Consensus Estimate for revenues is pegged at $741.8 million, calling for year-over-year growth of 20.5%.

Non-GAAP earnings per share are projected at 83-88 cents. The Zacks Consensus Estimate is pegged at 86 cents per share, indicating a year-on-year increase of 4.9%.

The company’s earnings surpassed the consensus mark in the all of the preceding four quarters, the average surprise being 14.7%.

Fortinet, Inc. Price and EPS Surprise

Fortinet, Inc. price-eps-surprise | Fortinet, Inc. Quote

Let’s see how things have shaped up for the upcoming announcement.

Factors at Play

Fortinet’s second-quarter performance is likely to have benefited from increased demand for security and networking products amid the coronavirus crisis as a huge global workforce is working remotely. Its quarterly performance is also expected to have gained from a robust momentum in FortiGate virtual machines, which is driving the firm’s private and public cloud billings. Management forecasts billings in the band of $860-$880 million for the second quarter.

Higher IT spending on cybersecurity is expected to have been conducive to Fortinet’s second-quarter performance. According to the latest Gartner report, worldwide spending on information security and risk management technology and services is likely to be up 12.4%, year over year, to $150.4 billion in 2021.

The rapid adoption of FortiGate-based secure SD-WAN offerings is anticipated to have supported Fortinet’s Product segment. The Zacks Consensus Estimate for Product revenues in the June-end quarter is pinned at $249 million, suggesting 17.5% year-over-year growth.

Also, FortiGuard security subscriptions and FortiCare technical support services are likely to have maintained solid traction, aiding the company’s Services segment. The Zacks Consensus Estimate for quarterly Services revenues is pinned at $494 million, calling for 22.3% year-over-year growth.

Moreover, higher inventory balances and extended payment plans are expected to have been key positives during the quarter under review.

Besides, the company is likely to have benefited from its IoT offerings with the Forti- ASIC SPU technology, which provides a cost and performance advantage over its competitors.

However, capital expenditures are expected to have been sequentially higher. Management had estimated capital expenditures for the second quarter between $30 million and $40 million, in its last earnings call.

Increased hiring, mostly in sales and marketing, and mergers & acquisitions spends, might have weighed on the bottom line.

What Our Model Says

Our proven model predicts an earnings beat for Fortinet this season. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Fortinet currently carries a Zacks Rank of 2 and has an Earnings ESP of +2.11%.

Other Stocks with Favorable Combinations

Here are some other companies, which, per our model, have the right combination of elements to post an earnings beat in their upcoming release:

Avnet, Inc. AVT has an Earnings ESP of +9.82% and currently flaunts a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Apple Inc. AAPL has an Earnings ESP of +3.40% and carries a Zacks Rank #3, at present.

Facebook FB has an Earnings ESP of +7.52% and holds a Zacks Rank of 3, currently.

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