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Palo Alto Networks (PANW) Stock Sinks As Market Gains: Here's Why

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Palo Alto Networks (PANW - Free Report) closed at $340.24 in the latest trading session, marking a -1.14% move from the prior day. The stock fell short of the S&P 500, which registered a gain of 0.08% for the day. On the other hand, the Dow registered a loss of 0.26%, and the technology-centric Nasdaq increased by 0.36%.

Heading into today, shares of the security software maker had gained 14.41% over the past month, outpacing the Computer and Technology sector's gain of 4.29% and the S&P 500's gain of 2.4% in that time.

The investment community will be paying close attention to the earnings performance of Palo Alto Networks in its upcoming release. The company's earnings per share (EPS) are projected to be $1.30, reflecting a 23.81% increase from the same quarter last year. In the meantime, our current consensus estimate forecasts the revenue to be $1.97 billion, indicating a 19.08% growth compared to the corresponding quarter of the prior year.

For the full year, the Zacks Consensus Estimates project earnings of $5.49 per share and a revenue of $8.17 billion, demonstrating changes of +23.65% and +18.58%, respectively, from the preceding year.

Investors should also pay attention to any latest changes in analyst estimates for Palo Alto Networks. These recent revisions tend to reflect the evolving nature of short-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To capitalize on this, we've crafted the Zacks Rank, a unique model that incorporates these estimate changes and offers a practical rating system.

The Zacks Rank system, stretching from #1 (Strong Buy) to #5 (Strong Sell), has a noteworthy track record of outperforming, validated by third-party audits, with stocks rated #1 producing an average annual return of +25% since the year 1988. Over the past month, the Zacks Consensus EPS estimate has remained steady. Palo Alto Networks is currently sporting a Zacks Rank of #1 (Strong Buy).

In the context of valuation, Palo Alto Networks is at present trading with a Forward P/E ratio of 62.71. This indicates a premium in contrast to its industry's Forward P/E of 35.77.

We can additionally observe that PANW currently boasts a PEG ratio of 2.28. 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. Internet - Software stocks are, on average, holding a PEG ratio of 1.79 based on yesterday's closing prices.

The Internet - Software industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 57, placing it within the top 23% of over 250 industries.

The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Don't forget to use Zacks.com to keep track of all these stock-moving metrics, and others, in the upcoming trading sessions.


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