Palo Alto Networks (PANW) Laps the Stock Market: Here's Why

Palo Alto Networks (PANW) closed the most recent trading day at $341.02, moving +2.72% from the previous trading session. This change outpaced the S&P 500's 0.79% gain on the day. On the other hand, the Dow registered a gain of 0.26%, and the technology-centric Nasdaq increased by 1.52%.

The security software maker's shares have seen an increase of 10.49% over the last month, surpassing the Computer and Technology sector's loss of 4.61% and the S&P 500's loss of 1.82%.

The upcoming earnings release of Palo Alto Networks will be of great interest to investors. The company is forecasted to report an EPS of $0.97, showcasing a 2.11% upward movement from the corresponding quarter of the prior year. Simultaneously, our latest consensus estimate expects the revenue to be $3.35 billion, showing a 32.1% escalation compared to the year-ago quarter.

For the full year, the Zacks Consensus Estimates project earnings of $3.77 per share and a revenue of $11.41 billion, demonstrating changes of +12.87% and +23.71%, respectively, from the preceding year.

Any recent changes to analyst estimates for Palo Alto Networks should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the business and profitability.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. 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 varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has moved 5.05% lower. At present, Palo Alto Networks boasts a Zacks Rank of #3 (Hold).

Looking at its valuation, Palo Alto Networks is holding a Forward P/E ratio of 88.06. This represents a premium compared to its industry average Forward P/E of 46.87.

It's also important to note that PANW currently trades at a PEG ratio of 6.64. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. Security stocks are, on average, holding a PEG ratio of 3.07 based on yesterday's closing prices.

Story Continues

The Security industry is part of the Computer and Technology sector. With its current Zacks Industry Rank of 106, this industry ranks in the top 44% of all industries, numbering over 250.

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.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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Palo Alto Networks, Inc. (PANW) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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