Palo Alto Networks, Inc. (NASDAQ:PANW) Is About To Turn The Corner
We feel now is a pretty good time to analyse Palo Alto Networks, Inc.'s (NASDAQ:PANW) business as it appears the company may be on the cusp of a considerable accomplishment. Palo Alto Networks, Inc. provides cybersecurity solutions worldwide. The US$48b market-cap company’s loss lessened since it announced a US$267m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$143m, as it approaches breakeven. As path to profitability is the topic on Palo Alto Networks' investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
See our latest analysis for Palo Alto Networks
According to the 43 industry analysts covering Palo Alto Networks, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of US$85m in 2023. The company is therefore projected to breakeven around a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 39% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Palo Alto Networks' growth isn’t the focus of this broad overview, however, bear in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we would like to bring into light with Palo Alto Networks is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
This article is not intended to be a comprehensive analysis on Palo Alto Networks, so if you are interested in understanding the company at a deeper level, take a look at Palo Alto Networks' company page on Simply Wall St. We've also put together a list of important factors you should further research:
Valuation: What is Palo Alto Networks worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Palo Alto Networks is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Palo Alto Networks’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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