Palo Alto Networks, Inc. Fundamental Analysis (NASDAQ: PANW)
Palo Alto Networks, Inc. Fundamental Analysis (NASDAQ: PANW)
Palo Alto Networks, Inc. (NASDAQ: PANW) shows weak financial fundamentals with a PE ratio of 713.48, profit margin of 2.67%, and ROE of 1.68%. The company generates $12.5B in annual revenue with strong year-over-year growth of 14.87%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 50.8/100 based on profitability, valuation, growth, and balance sheet metrics. The C grade reflects average fundamentals, with notable risks in certain areas.
Fundamental Health Score
We analyze PANW's fundamental strength across five key dimensions:
Efficiency Score
WeakPANW struggles to generate sufficient returns from assets.
Valuation Score
ModeratePANW shows balanced valuation metrics.
Growth Score
ModeratePANW shows steady but slowing expansion.
Financial Health Score
ModeratePANW shows balanced financial health with some risks.
Profitability Score
ModeratePANW maintains healthy but balanced margins.
Key Financial Metrics
Is PANW Expensive or Cheap?
P/E Ratio
PANW trades at 713.48 times earnings. This suggests a premium valuation.
PEG Ratio
When adjusting for growth, PANW's PEG of -9.74 indicates potential undervaluation.
Price to Book
The market values Palo Alto Networks, Inc. at 8.94 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 499.06 times EBITDA. This signals the market has high growth expectations.
How Well Does PANW Make Money?
Net Profit Margin
For every $100 in sales, Palo Alto Networks, Inc. keeps $2.67 as profit after all expenses.
Operating Margin
Core operations generate 6.05 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $1.68 in profit for every $100 of shareholder equity.
ROA
Palo Alto Networks, Inc. generates $0.63 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Palo Alto Networks, Inc. generates strong operating cash flow of $4.95B, reflecting robust business health.
Free Cash Flow
Palo Alto Networks, Inc. generates strong free cash flow of $4.77B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $5.86 in free cash annually.
FCF Yield
PANW converts 1.63% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
713.48
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
-9.74
vs 25 benchmark
P/B Ratio
Price to book value ratio
8.94
vs 25 benchmark
P/S Ratio
Price to sales ratio
23.30
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.09
vs 25 benchmark
Current Ratio
Current assets to current liabilities
0.87
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.02
vs 25 benchmark
ROA
Return on assets percentage
0.006
vs 25 benchmark
ROCE
Return on capital employed
0.02
vs 25 benchmark
How PANW Stacks Against Its Sector Peers
| Metric | PANW Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 713.48 | 33.76 | Worse (Expensive) |
| ROE | 1.68% | 777.00% | Weak |
| Net Margin | 2.67% | -3141.00% (disorted) | Weak |
| Debt/Equity | 0.09 | 0.59 | Strong (Low Leverage) |
| Current Ratio | 0.87 | 6.20 | Weak Liquidity |
| ROA | 0.63% | 337.00% | Weak |
PANW outperforms its industry in 1 out of 6 key metrics, but lagging in P/E Ratio.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Palo Alto Networks, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
137.43%
Industry Style: Growth, Innovation, High Beta
High GrowthEPS CAGR
472.69%
Industry Style: Growth, Innovation, High Beta
High GrowthFCF CAGR
214.87%
Industry Style: Growth, Innovation, High Beta
High Growth