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Palo Alto Networks (PANW) Outpaces Stock Market Gains: What You Should Know

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In the latest trading session, Palo Alto Networks (PANW - Free Report) closed at $226.98, marking a +1.06% move from the previous day. This move outpaced the S&P 500's daily gain of 0.33%. Elsewhere, the Dow gained 0.43%, while the tech-heavy Nasdaq added 0.33%.

Coming into today, shares of the security software maker had gained 9.56% in the past month. In that same time, the Computer and Technology sector gained 3.65%, while the S&P 500 gained 2.66%.

PANW will be looking to display strength as it nears its next earnings release. On that day, PANW is projected to report earnings of $1.03 per share, which would represent a year-over-year decline of 11.97%. Our most recent consensus estimate is calling for quarterly revenue of $767.60 million, up 17.01% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.07 per share and revenue of $3.46 billion, which would represent changes of -6.97% and +19.47%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for PANW. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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 remained stagnant. PANW is holding a Zacks Rank of #5 (Strong Sell) right now.

Valuation is also important, so investors should note that PANW has a Forward P/E ratio of 44.31 right now. Its industry sports an average Forward P/E of 40.21, so we one might conclude that PANW is trading at a premium comparatively.

Also, we should mention that PANW has a PEG ratio of 1.84. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Security stocks are, on average, holding a PEG ratio of 2.34 based on yesterday's closing prices.

The Security industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 84, which puts it in the top 33% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow PANW in the coming trading sessions, be sure to utilize Zacks.com.


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