Critical Comparison: Varonis Systems (NASDAQ:VRNS) and Fortinet (NASDAQ:FTNT)

Varonis Systems (NASDAQ:VRNS) and Fortinet (NASDAQ:FTNT) are both computer and technology companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, profitability, dividends, valuation, risk, earnings and institutional ownership.

Volatility & Risk

Varonis Systems has a beta of 0.67, meaning that its share price is 33% less volatile than the S&P 500. Comparatively, Fortinet has a beta of 1.13, meaning that its share price is 13% more volatile than the S&P 500.

Earnings and Valuation

This table compares Varonis Systems and Fortinet”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Varonis Systems	$550.95 million	12.00	-$95.76 million	($0.92)	-64.15
Fortinet	$5.96 billion	10.13	$1.75 billion	$2.51	31.38

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

Institutional & Insider Ownership

95.7% of Varonis Systems shares are held by institutional investors. Comparatively, 83.7% of Fortinet shares are held by institutional investors. 2.3% of Varonis Systems shares are held by insiders. Comparatively, 18.0% of Fortinet shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Varonis Systems	-17.30%	-23.06%	-5.76%
Fortinet	30.60%	111.46%	18.06%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Varonis Systems and Fortinet, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Varonis Systems	0	3	14	0	2.82
Fortinet	2	25	8	2	2.27

Varonis Systems currently has a consensus target price of $60.47, suggesting a potential upside of 2.46%. Fortinet has a consensus target price of $97.40, suggesting a potential upside of 23.65%. Given Fortinet’s higher possible upside, analysts plainly believe Fortinet is more favorable than Varonis Systems.

Summary

Fortinet beats Varonis Systems on 11 of the 15 factors compared between the two stocks.

About Varonis Systems

Varonis Systems, Inc. provides software products and services that allow enterprises to manage, analyze, alert, and secure enterprise data in North America, Europe, the Middle East, Africa, and internationally. Its software enables enterprises to protect data stored on premises and in the cloud, including sensitive files and emails; confidential personal data belonging to customers, and patients and employees' data; financial records; source code, strategic and product plans; and other intellectual property. It offers DatAdvantage that captures, aggregates, normalizes, and analyzes every data access event for users on Windows and UNIX/Linux servers, storage devices, email systems, intranet servers, cloud applications, and data stores; and DatAlert that profiles users, devices, and their behaviors related to systems and data, detects and alerts on deviations that indicate compromise, and provides a web-based dashboard and investigative interface. It also provides data Classification engine that identifies and tags data based on criteria set in various metadata dimensions, as well as provides business and information technology (IT) personnel with actionable intelligence about data; and DataPrivilege. In addition, the company offers Data Transport Engine, an execution engine that unifies the manipulation of data and metadata, translating business decisions, and instructions into technical commands, such as data migration or archiving; and DatAnswers that provides search functionality for enterprise data. It serves its products to financial services, public, healthcare, industrial, technology, insurance, energy and utilities, consumer and retail, education and construction, and engineering sectors. The company sells its products through a network of distributors and resellers. Varonis Systems, Inc. was incorporated in 2004 and is headquartered in New York, New York.

About Fortinet

Fortinet, Inc. provides cybersecurity and convergence of networking and security solutions worldwide. It offers secure networking solutions focus on the convergence of networking and security; network firewall solutions that consist of FortiGate data centers, hyperscale, and distributed firewalls, as well as encrypted applications; wireless LAN solutions; and secure connectivity solutions, including FortiSwitch secure ethernet switches, FortiAP wireless local area network access points, FortiExtender 5G connectivity gateways, and other products. The company also provides the Fortinet Unified SASE solutions that include firewall, SD-WAN, Secure web gateway, cloud access services broker, data loss prevention, zero trust network access, and cloud security, including web application firewalls, virtualized firewalls, and cloud-native firewalls. In addition, it offers security operations solutions comprising FortiAI generative AI assistant, FortiSIEM security information and event management, FortiSOAR security orchestration, automation and response, FortiEDR endpoint detection and response, FortiXDR extended detection and response, FortiMDR managed detection and response service, FortiNDR network detection and response, FortiRecon digital risk protection, FortiDeceptor deception technology, FortiGuard SoCaaS, FortiSandbox sandboxing, FortiGuard incident response, and other products. Further, the company offers FortiGuard security services consisting of FortiGuard application security, content security, device security, NOC/SOC security, and web security services; FortiCare technical support services; and training services to customers and channel partners, as well as operates a FortiGuard Lab, a cybersecurity threat intelligence and research organization. It serves enterprise, communication and security service providers, government organizations, and small and medium-sized businesses. The company was incorporated in 2000 and is headquartered in Sunnyvale, California.