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PANW

Palo Alto Networks NasdaqGS:PANW Stock Report

Last Price

US$165.58

Market Cap

US$49.5b

7D

-0.4%

1Y

3.7%

Updated

29 Sep, 2022

Data

Company Financials +
PANW fundamental analysis
Snowflake Score
Valuation5/6
Future Growth5/6
Past Performance0/6
Financial Health4/6
Dividends0/6

PANW Stock Overview

Palo Alto Networks, Inc. provides cybersecurity solutions worldwide.

Palo Alto Networks Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Palo Alto Networks
Historical stock prices
Current Share PriceUS$165.58
52 Week HighUS$213.63
52 Week LowUS$140.52
Beta1.13
1 Month Change-11.25%
3 Month Change-2.27%
1 Year Change3.70%
3 Year Change138.29%
5 Year Change241.40%
Change since IPO834.95%

Recent News & Updates

Sep 22
Quick Takes: Palo Alto, Alphabet, Meta & More

Quick Takes: Palo Alto, Alphabet, Meta & More

Vladimr Putin’s latest mobilization caused the oil price to spike yesterday morning. Somewhat predictably, energy stocks opened higher, - but then very quickly reversed course, along with the price of crude, when it emerged that US inventories increased by 1.1 million barrels from a week earlier. Exxon (NYSE: XOM), Chevron (NYSE: CVX) and Occidental Petroleum (NYSE: OXY) all closed lower on the day.

Sep 12
Palo Alto Networks' (NASDAQ: PANW) Stock Split Makes Sense when you look at the the Current Shareholder Base

Palo Alto Networks' (NASDAQ: PANW) Stock Split Makes Sense when you look at the the Current Shareholder Base

Palo Alto Networks (NASDAQ: PANW) will be conducting a 3-for-1 stock split after the market closes on Tuesday 13th September. On Wednesday, shareholders will receive two additional shares for each share they hold at the close on Tuesday. With a pre-split share price of ~$570, shares should be trading at ~$190 after the split. The number of shares outstanding will increase from ~99.4 million to ~299 million.

Sep 12

Is Palo Alto Networks Stock A Buy Or Sell After 3-For-1 Stock Split Announcement?

Summary Palo Alto will quietly execute a stock split this week. This is good news to know, but other information is more vital. Let's take a look at the future of Palo Alto, the potential for shareholder profits, and key performance indicators. When Is Palo Alto Conducting A Stock Split? Let's begin with some news you can use and then get down to the serious business: Palo Alto Networks (NASDAQ:PANW) will execute a 3:1 stock split Tuesday, September 13th, 2022. Investors will receive two additional shares for each one owned, and the stock will begin trading "split-adjusted" on September 14th. Based on Friday's close price, the stock will trade for about $188 per share. The stock has been buoyed lately by its quality earnings reports, followed by CrowdStrike's (CRWD) impressive report, which I covered here, and Zscaler's (ZS) equally fantastic earnings, as shown below. PANW data by YCharts Palo Alto and CrowdStrike have trounced the Nasdaq this year, although only Palo Alto is up year-to-date (YTD). Palo Alto reported earnings for Q4 and full-year fiscal 2022 on August 22, and the results were sneakily fantastic. The repeated outperformance explains how the stock has bested the Nasdaq by over 20% YTD and 40% over the last year, as shown below. PANW Total Return Level data by YCharts The string of impressive earnings reports illustrates the strength of the entire cybersecurity market. The market is thriving, and needs are increasing. Attacks are so commonplace that they barely register as headlines these days, but they are top of mind for IT departments and C-suite executives. Last week, the Los Angeles Unified School District and the parent company of Holiday Inn and Regent hotels, InterContinental Hotels Group (IHG), were hit. Both caused disruption, but were not catastrophic. The cybersecurity industry is expected to grow at a compounded annual rate of over 13% through at least 2027 (and likely well beyond) because of the constant vigilance that companies and governments need. Are Stock Splits Good For Shareholders? Stock splits matter very little to a stock's performance in the long run. However, here are a couple of positive effects: Splits keep shares more affordable and accessible to smaller investors and the company's employees. The bid-ask spread is lowered due to increased liquidity. It's a great time to take a deeper look at the company, how it grew the share price, and where it is headed. What Is The Future Of PANW Stock? Now that the housekeeping is out of the way, let's get down to the meat and potatoes. About four years ago, Palo Alto began transforming from a hardware company to a software company. At that time, its next-generation security (NGS) was less than 10% of its total billings. NGS now makes up 38% of billings, and the Prisma Cloud platform is an industry leader. Subscription and support now make up 80% of Palo Alto's billings. Subscription revenues are critical as they are (1) recurring and (2) predictable. The best companies on the planet, like Microsoft (MSFT), have successfully transitioned to a subscription model in recent years. The future for Palo Alto is in cloud-based comprehensive security solutions that support customer security needs end-to-end. Palo Alto is highly respected and trusted in the industry and reported some significant wins in Q4 FY22: While we've had many large customer wins recently, I want to highlight a team in three transactions. The first is a technology company that purchased products in all three of our platforms and a transaction over $75 million in value. The second is a financial services company that standardized its network security in our platform, including adding VMs and deploying Prisma Cloud, spending north of $40 million. And third is a professional services company that spent over $75 million across Strata, Prisma and Cortex. - Nikesh Arora - Chairman and CEO of Palo Alto Networks PANW Stock Key Metrics There are several performance indicators that investors should watch with Palo Alto: Growth in next-gen security annual recurring revenue (NGS ARR). Subscription products mix Free cash flow (FCF) and FCF margin. Balance sheet strength Growth in Next-Gen Security ARR The revenue recurring annually from next-gen security is an excellent way to measure Palo Alto's performance, as this is the key to its future success. The company posted 60% year-over-year growth in this category in fiscal 2022. As the CEO mentioned on the earnings call, this segment rivals the subscription growth rates of the up-and-comers like CrowdStrike and Zscaler. Data source: Palo Alto. Chart by author. Total revenue grew 29% in FY22 to reach $5.5 billion. Billings took a 44% jump in Q4 which means the strong growth should continue. Subscription product mix Investors should watch closely to ensure that management successfully grows recurring revenues as a percentage of total sales. The company's future is away from products, although product sales are rising and provide a nice bonus. The company continues to move in the right direction, as shown below. Data source: Palo Alto. Chart by author. Free cash flow and margin Free cash flow is one of the best ways to judge a growing software company. Suppose you look for GAAP earnings and traditional price-to-earnings (P/E) ratios seen in legacy industrial companies. In that case, Palo Alto and most of the cybersecurity industry are probably unsuitable for your portfolio. And that's ok.

Shareholder Returns

PANWUS SoftwareUS Market
7D-0.4%0.1%-2.0%
1Y3.7%-30.0%-20.3%

Return vs Industry: PANW exceeded the US Software industry which returned -30% over the past year.

Return vs Market: PANW exceeded the US Market which returned -20.3% over the past year.

Price Volatility

Is PANW's price volatile compared to industry and market?
PANW volatility
PANW Average Weekly Movement6.1%
Software Industry Average Movement8.9%
Market Average Movement6.9%
10% most volatile stocks in US Market15.8%
10% least volatile stocks in US Market2.8%

Stable Share Price: PANW is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: PANW's weekly volatility (6%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
200512,561Nikesh Arorahttps://www.paloaltonetworks.com

Palo Alto Networks, Inc. provides cybersecurity solutions worldwide. The company offers firewall appliances and software; Panorama, a security management solution for the control of firewall appliances and software deployed on a customer’s network, as well as their instances in public or private cloud environments, as a virtual or a physical appliance; and virtual system upgrades, which are available as extensions to the virtual system capacity that ships with physical appliances. It also provides subscription services covering the areas of threat prevention, malware and persistent threat, URL filtering, laptop and mobile device protection, and firewall; and DNS security, Internet of Things security, SaaS security API, and SaaS security inline, as well as threat intelligence, and data loss prevention.

Palo Alto Networks Fundamentals Summary

How do Palo Alto Networks's earnings and revenue compare to its market cap?
PANW fundamental statistics
Market CapUS$49.54b
Earnings (TTM)-US$267.00m
Revenue (TTM)US$5.50b

9.0x

P/S Ratio

-185.6x

P/E Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
PANW income statement (TTM)
RevenueUS$5.50b
Cost of RevenueUS$1.72b
Gross ProfitUS$3.78b
Other ExpensesUS$4.05b
Earnings-US$267.00m

Last Reported Earnings

Jul 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)-0.89
Gross Margin68.76%
Net Profit Margin-4.85%
Debt/Equity Ratio1,750.9%

How did PANW perform over the long term?

See historical performance and comparison
We’ve recently updated our valuation analysis.

Valuation

Is PANW undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

  • Price-To-Sales vs Peers

  • Price-To-Sales vs Industry

  • Price-To-Sales vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for PANW?

Other financial metrics that can be useful for relative valuation.

PANW key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue9.1x
Enterprise Value/EBITDA1590x
PEG Ration/a

Price to Sales Ratio vs Peers

How does PANW's PS Ratio compare to its peers?

PANW PS Ratio vs Peers
The above table shows the PS ratio for PANW vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPSEstimated GrowthMarket Cap
Peer Average11.6x
FTNT Fortinet
10.3x18.1%US$39.4b
VMW VMware
3.5x7.7%US$46.2b
NOW ServiceNow
11.9x19.9%US$78.4b
CRWD CrowdStrike Holdings
21.1x26.2%US$39.0b
PANW Palo Alto Networks
9.1x16.0%US$49.9b

Price-To-Sales vs Peers: PANW is good value based on its Price-To-Sales Ratio (9x) compared to the peer average (11.6x).


Price to Earnings Ratio vs Industry

How does PANW's PE Ratio compare vs other companies in the US Software Industry?

Price-To-Sales vs Industry: PANW is expensive based on its Price-To-Sales Ratio (9x) compared to the US Software industry average (4.4x)


Price to Sales Ratio vs Fair Ratio

What is PANW's PS Ratio compared to its Fair PS Ratio? This is the expected PS Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

PANW PS Ratio vs Fair Ratio.
Fair Ratio
Current PS Ratio9x
Fair PS Ratio12.5x

Price-To-Sales vs Fair Ratio: PANW is good value based on its Price-To-Sales Ratio (9x) compared to the estimated Fair Price-To-Sales Ratio (12.5x).


Share Price vs Fair Value

What is the Fair Price of PANW when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: PANW ($501.37) is trading below our estimate of fair value ($1261.52)

Significantly Below Fair Value: PANW is trading below fair value by more than 20%.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.


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Future Growth

How is Palo Alto Networks forecast to perform in the next 1 to 3 years based on estimates from 35 analysts?

Future Growth Score

5/6

Future Growth Score 5/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


42.6%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: PANW is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (1.9%).

Earnings vs Market: PANW is forecast to become profitable over the next 3 years, which is considered above average market growth.

High Growth Earnings: PANW is expected to become profitable in the next 3 years.

Revenue vs Market: PANW's revenue (16% per year) is forecast to grow faster than the US market (7.7% per year).

High Growth Revenue: PANW's revenue (16% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: PANW's Return on Equity is forecast to be very high in 3 years time (41.4%).


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Past Performance

How has Palo Alto Networks performed over the past 5 years?

Past Performance Score

0/6

Past Performance Score 0/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


-27.4%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: PANW is currently unprofitable.

Growing Profit Margin: PANW is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: PANW is unprofitable, and losses have increased over the past 5 years at a rate of 27.4% per year.

Accelerating Growth: Unable to compare PANW's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: PANW is unprofitable, making it difficult to compare its past year earnings growth to the Software industry (14.5%).


Return on Equity

High ROE: PANW has a negative Return on Equity (-127.14%), as it is currently unprofitable.


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Financial Health

How is Palo Alto Networks's financial position?

Financial Health Score

4/6

Financial Health Score 4/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Stable Cash Runway

  • Forecast Cash Runway

Financial Position Analysis

Short Term Liabilities: PANW's short term assets ($6.4B) do not cover its short term liabilities ($8.3B).

Long Term Liabilities: PANW's short term assets ($6.4B) exceed its long term liabilities ($3.7B).


Debt to Equity History and Analysis

Debt Level: PANW's net debt to equity ratio (20.1%) is considered satisfactory.

Reducing Debt: PANW's debt to equity ratio has increased from 69.2% to 1750.9% over the past 5 years.


Balance Sheet


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: Whilst unprofitable PANW has sufficient cash runway for more than 3 years if it maintains its current positive free cash flow level.

Forecast Cash Runway: PANW is unprofitable but has sufficient cash runway for more than 3 years, due to free cash flow being positive and growing by 16.1% per year.


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Dividend

What is Palo Alto Networks's current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage

Dividend Yield vs Market

Palo Alto Networks Dividend Yield vs Market
How does Palo Alto Networks dividend yield compare to the market?
SegmentDividend Yield
Company (Palo Alto Networks)n/a
Market Bottom 25% (US)1.6%
Market Top 25% (US)4.6%
Industry Average (Software)1.1%
Analyst forecast in 3 Years (Palo Alto Networks)0%

Notable Dividend: Unable to evaluate PANW's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate PANW's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if PANW's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if PANW's dividend payments have been increasing.


Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as PANW has not reported any payouts.


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Management

How experienced are the management team and are they aligned to shareholders interests?

3.0yrs

Average management tenure


CEO

Nikesh Arora (54 yo)

4.25yrs

Tenure

US$23,283,858

Compensation

Mr. Nikesh Arora, C.F.A., serves as the Chairman and Chief Executive Officer of Palo Alto Networks, Inc. since joining it on June 06, 2018. Mr. Arora was an Advisor of SoftBank Group Corp. since July 1, 20...


CEO Compensation Analysis

Nikesh Arora's Compensation vs Palo Alto Networks Earnings
How has Nikesh Arora's remuneration changed compared to Palo Alto Networks's earnings?
DateTotal Comp.SalaryCompany Earnings
Jul 31 2022n/an/a

-US$267m

Apr 30 2022n/an/a

-US$390m

Jan 31 2022n/an/a

-US$461m

Oct 31 2021n/an/a

-US$510m

Jul 31 2021US$23mUS$333k

-US$499m

Apr 30 2021n/an/a

-US$438m

Jan 31 2021n/an/a

-US$368m

Oct 31 2020n/an/a

-US$300m

Jul 31 2020US$2mUS$667k

-US$267m

Apr 30 2020n/an/a

-US$229m

Jan 31 2020n/an/a

-US$174m

Oct 31 2019n/an/a

-US$103m

Jul 31 2019US$24mUS$1m

-US$82m

Apr 30 2019n/an/a

-US$54m

Jan 31 2019n/an/a

-US$74m

Oct 31 2018n/an/a

-US$97m

Jul 31 2018US$126mUS$156k

-US$122m

Compensation vs Market: Nikesh's total compensation ($USD23.28M) is above average for companies of similar size in the US market ($USD13.03M).

Compensation vs Earnings: Nikesh's compensation has increased whilst the company is unprofitable.


Leadership Team

Experienced Management: PANW's management team is considered experienced (3 years average tenure).


Board Members

Experienced Board: PANW's board of directors are considered experienced (8.4 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: PANW insiders have only sold shares in the past 3 months.


Recent Insider Transactions

NasdaqGS:PANW Recent Insider Transactions by Companies or Individuals
DateValueNameEntityRoleSharesMax Price
24 Aug 22SellUS$134,401Aparna BawaIndividual711US$190.33
25 May 22SellUS$476,987Aparna BawaIndividual2,853US$167.19

Ownership Breakdown

What is the ownership structure of PANW?
Owner TypeNumber of SharesOwnership Percentage
Private Companies7,5930.003%
State or Government128,1000.04%
Individual Insiders5,254,5671.8%
General Public29,796,87510.0%
Institutions264,026,67388.2%

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 2.4%.


Top Shareholders

Top 25 shareholders own 43.08% of the company
OwnershipNameSharesCurrent ValueChange %Portfolio %
7.7%
The Vanguard Group, Inc.
23,038,383$3.8b1.69%0.09%
5.47%
BlackRock, Inc.
16,366,122$2.7b-9.41%0.07%
2.7%
Morgan Stanley, Investment Banking and Brokerage Investments
8,064,756$1.3b-11.76%0.27%
2.25%
ClearBridge Investments, LLC
6,746,454$1.1b-10.38%1.03%
2.08%
State Street Global Advisors, Inc.
6,236,625$1.0b-2.23%0.06%
2.08%
Wellington Management Group LLP
6,224,517$1.0b-14.75%0.19%
1.76%
Columbia Management Investment Advisers, LLC
5,261,490$871.2m-6.98%0.26%
1.66%
FMR LLC
4,969,485$822.8m-22.28%0.08%
1.5%
Teachers Insurance and Annuity Association-College Retirement Equities Fund
4,486,569$742.9m-8.15%0.25%
1.46%
Goldman Sachs Asset Management, L.P.
4,355,712$721.2m22.45%0.31%
1.26%
Barclays PLC Private Banking & Investment Banking Investment
3,772,452$624.6m628642%0.97%
1.25%
Allianz Asset Management AG
3,726,708$617.1m11.1%0.55%
1.11%
UBS Asset Management
3,325,914$550.7m-6.5%0.11%
1.11%
Altshuler Shaham Ltd.
3,316,392$549.1m7.53%6.34%
1.08%
Geode Capital Management, LLC
3,232,974$535.3m-18.85%0.07%
1.01%
Invesco Ltd.
3,032,988$502.2m-14.68%0.17%
0.94%
Norges Bank Investment Management
2,814,597$466.0m0%0.06%
0.94%
J.P. Morgan Asset Management, Inc.
2,811,972$465.6m-24.36%0.09%
0.9%
First Trust Advisors LP
2,693,061$445.9m-1.51%0.51%
0.88%
Bank of America Corporation, Asset Management Arm
2,635,458$436.4m-7.25%0.17%
0.84%
Northern Trust Global Investments
2,502,390$414.3m-3.13%0.08%
0.81%
Legal & General Investment Management Limited
2,412,216$399.4m3.3%0.12%
0.8%
Pictet Asset Management Limited
2,408,613$398.8m-11.67%0.36%
0.75%
Nir Zuk
2,254,350$373.3m-4.63%no data
0.74%
CPP Investments
2,201,364$364.5m0.26%0.36%

Company Information

Palo Alto Networks, Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: Palo Alto Networks, Inc.
  • Ticker: PANW
  • Exchange: NasdaqGS
  • Founded: 2005
  • Industry: Systems Software
  • Sector: Software
  • Implied Market Cap: US$49.544b
  • Shares outstanding: 299.21m
  • Website: https://www.paloaltonetworks.com

Number of Employees


Location

  • Palo Alto Networks, Inc.
  • 3000 Tannery Way
  • Santa Clara
  • California
  • 95054
  • United States


Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
PANWNasdaqGS (Nasdaq Global Select)YesCommon StockUSUSDJul 2012
5APDB (Deutsche Boerse AG)YesCommon StockDEEURJul 2012
5APXTRA (XETRA Trading Platform)YesCommon StockDEEURJul 2012
0KF5LSE (London Stock Exchange)YesCommon StockGBUSDJul 2012
PANW *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNJul 2012
P2AN34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH 60 REPR 1 COMBRBRLJan 2022
PANWDBASE (Buenos Aires Stock Exchange)CEDEAR EACH 50 REP 1 COMARUSDJul 2022
PANWBASE (Buenos Aires Stock Exchange)CEDEAR EACH 50 REP 1 COMARARSJul 2022

Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/09/29 00:00
End of Day Share Price2022/09/29 00:00
Earnings2022/07/31
Annual Earnings2022/07/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.