PALO ALTO NETWORKS INC (PANW) Stock Fundamental Analysis
NASDAQ:PANW - Nasdaq - US6974351057 - Common Stock - Currency: USD
We assign a fundamental rating of 5 out of 10 to PANW. PANW was compared to 281 industry peers in the Software industry. Both the profitability and the financial health of PANW get a neutral evaluation. Nothing too spectacular is happening here. PANW is valued quite expensive, but it does show an excellent growth. With these ratings, PANW could be worth investigating further for growth investing!.
1. Profitability
1.1 Basic Checks
In the past year PANW was profitable.
PANW had a positive operating cash flow in the past year.
The reported net income has been mixed in the past 5 years: PANW reported negative net income in multiple years.
PANW had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
Looking at the Return On Assets, with a value of 5.99%, PANW is in the better half of the industry, outperforming 76.51% of the companies in the same industry.
PANW's Return On Equity of 19.68% is amongst the best of the industry. PANW outperforms 85.05% of its industry peers.
The Return On Invested Capital of PANW (6.06%) is better than 77.22% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.99% | ||
| ROE | 19.68% | ||
| ROIC | 6.06% |
ROA(3y)4.58%
ROA(5y)1.19%
ROE(3y)-17.38%
ROE(5y)-31%
ROIC(3y)N/A
ROIC(5y)N/A
1.3 Margins
PANW has a better Profit Margin (14.64%) than 79.00% of its industry peers.
The Operating Margin of PANW (12.20%) is better than 80.43% of its industry peers.
The Gross Margin of PANW (73.86%) is better than 65.12% of its industry peers.
In the last couple of years the Gross Margin of PANW has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 12.2% | ||
| PM (TTM) | 14.64% | ||
| GM | 73.86% |
OM growth 3YN/A
OM growth 5YN/A
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y2.01%
GM growth 5Y0.61%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so PANW is destroying value.
PANW has more shares outstanding than it did 1 year ago.
The number of shares outstanding for PANW has been increased compared to 5 years ago.
PANW has a better debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 5.73 indicates that PANW is not in any danger for bankruptcy at the moment.
PANW's Altman-Z score of 5.73 is fine compared to the rest of the industry. PANW outperforms 74.73% of its industry peers.
There is no outstanding debt for PANW. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0.18 | ||
| Altman-Z | 5.73 |
ROIC/WACC0.58
WACC10.38%
2.3 Liquidity
PANW has a Current Ratio of 0.84. This is a bad value and indicates that PANW is not financially healthy enough and could expect problems in meeting its short term obligations.
PANW's Current ratio of 0.84 is on the low side compared to the rest of the industry. PANW is outperformed by 81.49% of its industry peers.
PANW has a Quick Ratio of 0.84. This is a bad value and indicates that PANW is not financially healthy enough and could expect problems in meeting its short term obligations.
PANW has a Quick ratio of 0.84. This is amonst the worse of the industry: PANW underperforms 81.14% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.84 | ||
| Quick Ratio | 0.84 |
3. Growth
3.1 Past
PANW shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 11.71%, which is quite good.
The Earnings Per Share has been growing by 25.52% on average over the past years. This is a very strong growth
The Revenue has grown by 13.86% in the past year. This is quite good.
Measured over the past years, PANW shows a very strong growth in Revenue. The Revenue has been growing by 22.59% on average per year.
EPS 1Y (TTM)11.71%
EPS 3Y40.37%
EPS 5Y25.52%
EPS Q2Q%10.96%
Revenue 1Y (TTM)13.86%
Revenue growth 3Y23.55%
Revenue growth 5Y22.59%
Sales Q2Q%14.29%
3.2 Future
The Earnings Per Share is expected to grow by 23.51% on average over the next years. This is a very strong growth
Based on estimates for the next years, PANW will show a quite strong growth in Revenue. The Revenue will grow by 15.53% on average per year.
EPS Next Y15.83%
EPS Next 2Y14.82%
EPS Next 3Y15.32%
EPS Next 5Y23.51%
Revenue Next Year14.56%
Revenue Next 2Y14.72%
Revenue Next 3Y14.69%
Revenue Next 5Y15.53%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
Although the future Revenue growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 61.88 indicates a quite expensive valuation of PANW.
PANW's Price/Earnings is on the same level as the industry average.
The average S&P500 Price/Earnings ratio is at 27.85. PANW is valued rather expensively when compared to this.
PANW is valuated quite expensively with a Price/Forward Earnings ratio of 49.84.
PANW's Price/Forward Earnings ratio is in line with the industry average.
When comparing the Price/Forward Earnings ratio of PANW to the average of the S&P500 Index (20.77), we can say PANW is valued expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 61.88 | ||
| Fwd PE | 49.84 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, PANW is valued a bit cheaper than the industry average as 60.85% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, PANW is valued a bit cheaper than the industry average as 62.99% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 42.07 | ||
| EV/EBITDA | 87.81 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates PANW does not grow enough to justify the current Price/Earnings ratio.
PANW has a very decent profitability rating, which may justify a higher PE ratio.
PANW's earnings are expected to grow with 15.32% in the coming years. This may justify a more expensive valuation.
PEG (NY)3.91
PEG (5Y)2.43
EPS Next 2Y14.82%
EPS Next 3Y15.32%
5. Dividend
5.1 Amount
PANW does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
186.27
-0.66 (-0.35%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners81.36%
Inst Owner Change0.69%
Ins Owners1.03%
Ins Owner Change7.87%
Market Cap123.33B
Analysts78.67
Price Target213.58 (14.66%)
Short Float %3.76%
Short Ratio4.42
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
Yearly DividendN/A
Dividend Growth(5Y)N/A
DPN/A
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)2.72%
Min EPS beat(2)2.16%
Max EPS beat(2)3.28%
EPS beat(4)4
Avg EPS beat(4)3.51%
Min EPS beat(4)2.16%
Max EPS beat(4)5.04%
EPS beat(8)8
Avg EPS beat(8)8.24%
EPS beat(12)12
Avg EPS beat(12)10.35%
EPS beat(16)16
Avg EPS beat(16)9.08%
Revenue beat(2)0
Avg Revenue beat(2)-1.14%
Min Revenue beat(2)-1.16%
Max Revenue beat(2)-1.12%
Revenue beat(4)0
Avg Revenue beat(4)-1.01%
Min Revenue beat(4)-1.16%
Max Revenue beat(4)-0.7%
Revenue beat(8)0
Avg Revenue beat(8)-1.2%
Revenue beat(12)1
Avg Revenue beat(12)-1.13%
Revenue beat(16)4
Avg Revenue beat(16)-0.59%
PT rev (1m)-1.21%
PT rev (3m)1.2%
EPS NQ rev (1m)0%
EPS NQ rev (3m)1.44%
EPS NY rev (1m)-0.17%
EPS NY rev (3m)1.46%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.26%
Revenue NY rev (1m)-0.06%
Revenue NY rev (3m)0.16%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 61.88 | ||
| Fwd PE | 49.84 | ||
| P/S | 14.39 | ||
| P/FCF | 42.07 | ||
| P/OCF | 39.68 | ||
| P/B | 19.34 | ||
| P/tB | 79.41 | ||
| EV/EBITDA | 87.81 |
EPS(TTM)3.01
EY1.62%
EPS(NY)3.74
Fwd EY2.01%
FCF(TTM)4.43
FCFY2.38%
OCF(TTM)4.69
OCFY2.52%
SpS12.94
BVpS9.63
TBVpS2.35
PEG (NY)3.91
PEG (5Y)2.43
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.99% | ||
| ROE | 19.68% | ||
| ROCE | 7.8% | ||
| ROIC | 6.06% | ||
| ROICexc | 7.98% | ||
| ROICexgc | 15.19% | ||
| OM | 12.2% | ||
| PM (TTM) | 14.64% | ||
| GM | 73.86% | ||
| FCFM | 34.21% |
ROA(3y)4.58%
ROA(5y)1.19%
ROE(3y)-17.38%
ROE(5y)-31%
ROIC(3y)N/A
ROIC(5y)N/A
ROICexc(3y)N/A
ROICexc(5y)N/A
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)N/A
ROCE(5y)N/A
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3YN/A
ROICexc growth 5YN/A
OM growth 3YN/A
OM growth 5YN/A
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y2.01%
GM growth 5Y0.61%
F-Score6
Asset Turnover0.41
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0.18 | ||
| Debt/EBITDA | 0 | ||
| Cap/Depr | 54.8% | ||
| Cap/Sales | 2.06% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 227.33% | ||
| Profit Quality | 233.7% | ||
| Current Ratio | 0.84 | ||
| Quick Ratio | 0.84 | ||
| Altman-Z | 5.73 |
F-Score6
WACC10.38%
ROIC/WACC0.58
Cap/Depr(3y)58.47%
Cap/Depr(5y)64.8%
Cap/Sales(3y)2.53%
Cap/Sales(5y)3.32%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)11.71%
EPS 3Y40.37%
EPS 5Y25.52%
EPS Q2Q%10.96%
EPS Next Y15.83%
EPS Next 2Y14.82%
EPS Next 3Y15.32%
EPS Next 5Y23.51%
Revenue 1Y (TTM)13.86%
Revenue growth 3Y23.55%
Revenue growth 5Y22.59%
Sales Q2Q%14.29%
Revenue Next Year14.56%
Revenue Next 2Y14.72%
Revenue Next 3Y14.69%
Revenue Next 5Y15.53%
EBIT growth 1Y34.39%
EBIT growth 3YN/A
EBIT growth 5YN/A
EBIT Next Year32.04%
EBIT Next 3Y21.18%
EBIT Next 5YN/A
FCF growth 1Y9.02%
FCF growth 3Y30.76%
FCF growth 5Y27.39%
OCF growth 1Y9.27%
OCF growth 3Y29.41%
OCF growth 5Y25.28%