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Palo Alto Networks (PANW) Dips More Than Broader Markets: What You Should Know

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Palo Alto Networks (PANW - Free Report) closed the most recent trading day at $608.23, moving -1.34% from the previous trading session. This change lagged the S&P 500's 0.27% loss on the day. At the same time, the Dow added 0.4%, and the tech-heavy Nasdaq lost 0.18%.

Heading into today, shares of the security software maker had gained 11.71% over the past month, outpacing the Computer and Technology sector's gain of 7.53% and the S&P 500's gain of 7.36% in that time.

Palo Alto Networks will be looking to display strength as it nears its next earnings release. In that report, analysts expect Palo Alto Networks to post earnings of $1.66 per share. This would mark year-over-year growth of 20.29%. Our most recent consensus estimate is calling for quarterly revenue of $1.36 billion, up 26.51% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $7.27 per share and revenue of $5.46 billion, which would represent changes of +18.4% and +28.21%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for Palo Alto Networks. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 1.58% lower. Palo Alto Networks is currently a Zacks Rank #3 (Hold).

Looking at its valuation, Palo Alto Networks is holding a Forward P/E ratio of 84.79. For comparison, its industry has an average Forward P/E of 57.83, which means Palo Alto Networks is trading at a premium to the group.

Meanwhile, PANW's PEG ratio is currently 2.89. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Security stocks are, on average, holding a PEG ratio of 3.28 based on yesterday's closing prices.

The Security industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 165, putting it in the bottom 35% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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