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Should You Buy, Sell or Hold PANW Stock Before Q1 Earnings Release?
Read MoreHide Full Article
Key Takeaways
Palo Alto Networks expects Q1 revenues of $2.45-$2.47B, up about 15% year over year.
Strong demand for AI-powered XSIAM, SASE, and software firewalls supports NGS ARR growth.
PANW trades at a lower P/S ratio than peers, reflecting reasonable value amid solid long-term prospects.
Palo Alto Networks, Inc. ((PANW - Free Report) ) is scheduled to report its first-quarter fiscal 2026 results on Nov. 19.
Palo Alto Networks projects its fiscal first-quarter revenues in the range of $2.45-$2.47 billion, which suggests a year-over-year increase of 14.5-15.5%. The Zacks Consensus Estimate is pegged at $2.46 billion, which implies growth of 15.1% from the year-ago reported figure.
The consensus mark for PANW’s fiscal first-quarter non-GAAP earnings has remained unchanged at 89 cents per share over the past 60 days, which calls for a 14.1% increase from the year-ago quarter’s earnings.
Image Source: Zacks Investment Research
Palo Alto Networks’ earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 5.3%.
Our proven model does not conclusively predict an earnings beat for Palo Alto Networks this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.
Palo Alto Networks’ first-quarter fiscal 2026 performance is likely to have benefited from the robust traction stemming from deal wins, along with continued progress in its platformization strategy. The increased adoption of its AI-powered XSIAM, SASE, and software firewall offerings, which enable enterprises to advance zero-trust network security, is likely to have contributed to the growing share of incremental Next-Generation Security (NGS) Annual Recurring Revenues (ARR).
Through its platformization strategy, Palo Alto Networks is enabling larger customers to adopt its full security platform, which is helping the company grow faster and secure bigger deals. In the fourth quarter of fiscal 2025, customers with more than $20 million in NGS ARR saw a year-over-year surge of nearly 80%. Customers with more than $5 million and $10 million in ARR also increased about 50%. These gains show that large enterprises are consolidating security budgets with Palo Alto Networks.
The accelerated migration to Palo Alto Networks’ cloud platform is likely to have improved the adoption of its platforms. Moreover, the increased use of the cloud and remote networks in a hybrid working environment has resulted in escalating cyberattacks. This is leading to a rise in the demand for cybersecurity solutions. PANW’s fiscal first-quarter performance is likely to have benefited from this demand surge.
Federal Risk and Authorization Management Program (FedRAMP) recognitions are boosting the adoption of Palo Alto Networks’ products by government organizations. The company’s Prisma Access, Cortex XDR, Cortex Data Lake, Prisma Cloud and WildFire received FedRAMP recognitions. This FedRAMP recognition reflects the U.S. public sector’s trust in PANW’s IoT security solutions. This is anticipated to have encouraged the adoption of its products during the period under discussion.
Price Performance & Stock Valuation
Year to date, Palo Alto Networks’ shares have gained 15.7%, underperforming the Zacks Security industry’s growth of 27.4%. The stock has also underperformed its industry peers, including CyberArk ((CYBR - Free Report) ), CrowdStrike ((CRWD - Free Report) ) and Zscaler ((ZS - Free Report) ). Year to date, shares of CyberArk, CrowdStrike and Zscaler have gained 50.3%, 59.7% and 76.8%, respectively.
YTD Price Return Performance
Image Source: Zacks Investment Research
Now, let’s look at the value Palo Alto Networks offers investors at the current levels. Palo Alto Networks is currently trading at a low price-to-sales (P/S) multiple compared to the industry. PANW’s forward 12-month P/S ratio sits at 12.99X, lower than the industry’s forward 12-month P/S ratio of 13.74X.
PANW Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
Palo Alto Networks stock also trades at a lower P/S multiple compared with other industry peers, including CyberArk, CrowdStrike and Zscaler. At present, CyberArk, CrowdStrike and Zscaler have P/S multiples of 16.32X, 24.58X and 14.53X, respectively.
Investment Consideration
Palo Alto Networks’ innovative product offerings, strong customer base and expanding market opportunities in areas like Zero Trust and private 5G security solutions drive its growth potential. Moreover, Palo Alto Networks’ continuous technological advancements make it a compelling long-term investment opportunity.
Additionally, the pending acquisition of CyberArk would strengthen Palo Alto Networks’ foothold in a category where it currently lacks scale. PANW has already built out capabilities in endpoint and network security through its Cortex and Prisma platforms. However, identity-driven threat protection has remained a weaker link. By integrating CyberArk’s capabilities, Palo Alto Networks would be able to deliver a more comprehensive and unified platform that spans cloud, endpoint, network and identity protection.
Nevertheless, Palo Alto Networks’ near-term prospects might be hurt by softening IT spending as enterprises postpone large tech investments due to macroeconomic uncertainties and geopolitical issues.
Conclusion: Hold Palo Alto Networks Stock Now
Palo Alto Networks faces macroeconomic headwinds and challenges from the shift to software and cloud offerings, which can lead to revenue cannibalization. However, its strong go-to-market execution, including rapid platformization adoption and expansion into key growth areas, is helping it win customers and expand market share. While near-term pressures remain, the company’s innovation-led strategy, reasonable valuation and long-term growth prospects make PANW a stock worth holding at present.
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Should You Buy, Sell or Hold PANW Stock Before Q1 Earnings Release?
Key Takeaways
Palo Alto Networks, Inc. ((PANW - Free Report) ) is scheduled to report its first-quarter fiscal 2026 results on Nov. 19.
Palo Alto Networks projects its fiscal first-quarter revenues in the range of $2.45-$2.47 billion, which suggests a year-over-year increase of 14.5-15.5%. The Zacks Consensus Estimate is pegged at $2.46 billion, which implies growth of 15.1% from the year-ago reported figure.
The consensus mark for PANW’s fiscal first-quarter non-GAAP earnings has remained unchanged at 89 cents per share over the past 60 days, which calls for a 14.1% increase from the year-ago quarter’s earnings.
Image Source: Zacks Investment Research
Palo Alto Networks’ earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 5.3%.
Palo Alto Networks, Inc. Price and EPS Surprise
Palo Alto Networks, Inc. price-eps-surprise | Palo Alto Networks, Inc. Quote
Earnings Whispers for PANW
Our proven model does not conclusively predict an earnings beat for Palo Alto Networks this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.
Palo Alto Networks has an Earnings ESP of 0.00% and carries a Zacks Rank #3 at present. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Likely to Influence PANW’s Q1 Results
Palo Alto Networks’ first-quarter fiscal 2026 performance is likely to have benefited from the robust traction stemming from deal wins, along with continued progress in its platformization strategy. The increased adoption of its AI-powered XSIAM, SASE, and software firewall offerings, which enable enterprises to advance zero-trust network security, is likely to have contributed to the growing share of incremental Next-Generation Security (NGS) Annual Recurring Revenues (ARR).
Through its platformization strategy, Palo Alto Networks is enabling larger customers to adopt its full security platform, which is helping the company grow faster and secure bigger deals. In the fourth quarter of fiscal 2025, customers with more than $20 million in NGS ARR saw a year-over-year surge of nearly 80%. Customers with more than $5 million and $10 million in ARR also increased about 50%. These gains show that large enterprises are consolidating security budgets with Palo Alto Networks.
The accelerated migration to Palo Alto Networks’ cloud platform is likely to have improved the adoption of its platforms. Moreover, the increased use of the cloud and remote networks in a hybrid working environment has resulted in escalating cyberattacks. This is leading to a rise in the demand for cybersecurity solutions. PANW’s fiscal first-quarter performance is likely to have benefited from this demand surge.
Federal Risk and Authorization Management Program (FedRAMP) recognitions are boosting the adoption of Palo Alto Networks’ products by government organizations. The company’s Prisma Access, Cortex XDR, Cortex Data Lake, Prisma Cloud and WildFire received FedRAMP recognitions. This FedRAMP recognition reflects the U.S. public sector’s trust in PANW’s IoT security solutions. This is anticipated to have encouraged the adoption of its products during the period under discussion.
Price Performance & Stock Valuation
Year to date, Palo Alto Networks’ shares have gained 15.7%, underperforming the Zacks Security industry’s growth of 27.4%. The stock has also underperformed its industry peers, including CyberArk ((CYBR - Free Report) ), CrowdStrike ((CRWD - Free Report) ) and Zscaler ((ZS - Free Report) ). Year to date, shares of CyberArk, CrowdStrike and Zscaler have gained 50.3%, 59.7% and 76.8%, respectively.
YTD Price Return Performance
Image Source: Zacks Investment Research
Now, let’s look at the value Palo Alto Networks offers investors at the current levels. Palo Alto Networks is currently trading at a low price-to-sales (P/S) multiple compared to the industry. PANW’s forward 12-month P/S ratio sits at 12.99X, lower than the industry’s forward 12-month P/S ratio of 13.74X.
PANW Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
Palo Alto Networks stock also trades at a lower P/S multiple compared with other industry peers, including CyberArk, CrowdStrike and Zscaler. At present, CyberArk, CrowdStrike and Zscaler have P/S multiples of 16.32X, 24.58X and 14.53X, respectively.
Investment Consideration
Palo Alto Networks’ innovative product offerings, strong customer base and expanding market opportunities in areas like Zero Trust and private 5G security solutions drive its growth potential. Moreover, Palo Alto Networks’ continuous technological advancements make it a compelling long-term investment opportunity.
Additionally, the pending acquisition of CyberArk would strengthen Palo Alto Networks’ foothold in a category where it currently lacks scale. PANW has already built out capabilities in endpoint and network security through its Cortex and Prisma platforms. However, identity-driven threat protection has remained a weaker link. By integrating CyberArk’s capabilities, Palo Alto Networks would be able to deliver a more comprehensive and unified platform that spans cloud, endpoint, network and identity protection.
Nevertheless, Palo Alto Networks’ near-term prospects might be hurt by softening IT spending as enterprises postpone large tech investments due to macroeconomic uncertainties and geopolitical issues.
Conclusion: Hold Palo Alto Networks Stock Now
Palo Alto Networks faces macroeconomic headwinds and challenges from the shift to software and cloud offerings, which can lead to revenue cannibalization. However, its strong go-to-market execution, including rapid platformization adoption and expansion into key growth areas, is helping it win customers and expand market share. While near-term pressures remain, the company’s innovation-led strategy, reasonable valuation and long-term growth prospects make PANW a stock worth holding at present.