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What's Going On With Palo Alto Networks Shares?

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Earnings season continues to unravel, with an extensive list of companies reporting daily.

We’re well into the season so far, with many companies posting better-than-expected results in the face of a feared earnings “apocalypse.”

And results from Palo Alto Networks (PANW - Free Report) this morning have certainly impressed, with shares soaring following the release.

As we can see from the chart below, PANW shares have staged a strong rebound in 2023, up more than 30% year-to-date and crushing the S&P 500’s performance.

Zacks Investment Research
Image Source: Zacks Investment Research

It raises a valid question: With shares soaring, how does the company currently stack up? Let’s take a closer look at the latest quarterly release and a few other aspects.

Palo Alto Networks Q2

Palo Alto Networks reported earnings of $1.05 per share, exceeding the Zacks Consensus EPS Estimate of $0.78 by 35% and growing a sizable 81% year-over-year.

Regarding the top line, PANW generated $1.7 billion in quarterly revenue, modestly ahead of expectations and climbing 26% from the year-ago quarter.  

In addition, the company’s Billings grew 26% year-over-year to $2 billion.

On the quarter, Nikesh Arora, CEO, said, “We continue to see our teams execute well in the midst of macroeconomic challenges, helping customers consolidate their security architectures."

And to top it off, PANW provided guidance for FY23 Q3; the company expects total billings in a range of $2.2 – $2.25 billion, with the midpoint reflecting a 23.5% year-over-year change. Further, Palo Alto expects Q3 revenue to be in the $1.695 billion – $1.725 billion range, representing year-over-year growth of roughly 23%.

The company is certainly no stranger to exceeding quarterly estimates, with this print reflecting the 12th consecutive double beat.

Valuation & Growth Outlook

PANW shares presently trade at a 7.3X price-to-sales ratio, a tick below the 7.5X five-year median but above the Zacks Computer and Technology sector average.

Zacks Investment Research
Image Source: Zacks Investment Research

The company carries a Style Score of “D” for Value.

In addition, PANW carries a favorable growth profile, with earnings forecasted to climb 35% in its current fiscal year and a further 17% in FY24.

The projected earnings growth comes on the back of forecasted year-over-year revenue upticks of 25% in FY23 and 22% in FY24.

Zacks Investment Research
Image Source: Zacks Investment Research

Bottom Line

Investors cheered on PANW’s quarterly results, sending shares soaring in today’s session. The company beat on both the top and bottom lines, continuing a trend well in place.

In addition, PANW provided uplifting guidance for its upcoming quarter, putting the cherry on top. Presently, Palo Alto Networks (PANW - Free Report) is a Zacks Rank #3 (Hold).

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