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Better Buy: FireEye Inc vs. Fortinet

Image source: Getty Images.

Judging by their relative stock price performances, there's little question in investors' minds that Fortinet (NASDAQ:FTNT) has a brighter future than FireEye (NASDAQ:FEYE) in the cybersecurity market. Its shares are down 12% in the last year compared to a near-60% dive for FireEye.

The drop could spell opportunity for investors looking to gain access to this growing industry at a discount to Fortinet's expensive price-to-earnings valuation. But is a FireEye purchase really worth the extra risk?

Comparison statistics

Metric

FireEye

Fortinet

Market cap

$2.6 billion

$6.4 billion

Billings growth

10%

26%

Gross margin

59%

73%

Net margin

N/A

1%

Price/earnings

N/A

53 times

Price/sales

3.5 times

5.6 times

Billings growth is for calendar Q2. Gross margin, net margin, and valuation ratios are for trailing 12 months. Data source: Company financial filings and YCharts.

FireEye is cheaper

There's no question that FireEye is facing major challenges that impact its operations, its finances, and its management. Billings growth has slowed for several consecutive quarters and has missed executives' forecast by a wide margin recently. FireEye isn't profitable -- and doesn't expect to reach that milestone for at least another year -- while Fortinet has remained barely, but consistently, in the black. Meanwhile, FireEye is going through...


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