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Palo Alto Networks (PANW) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

Palo Alto Networks (PANW) closed the most recent trading day at $233.52, moving -0.21% from the previous trading session. This move lagged the S&P 500's daily loss of 0.12%. Meanwhile, the Dow gained 0.11%, and the Nasdaq, a tech-heavy index, added 0.02%.

Coming into today, shares of the security software maker had gained 9.97% in the past month. In that same time, the Computer and Technology sector gained 5.66%, while the S&P 500 gained 4.42%.

Investors will be hoping for strength from PANW as it approaches its next earnings release, which is expected to be November 25, 2019. On that day, PANW is projected to report earnings of $1.03 per share, which would represent a year-over-year decline of 11.97%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $767.60 million, up 17.01% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $5.07 per share and revenue of $3.46 billion. These totals would mark changes of -6.97% and +19.47%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for PANW. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. PANW is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, PANW is currently trading at a Forward P/E ratio of 46.17. Its industry sports an average Forward P/E of 39.83, so we one might conclude that PANW is trading at a premium comparatively.

We can also see that PANW currently has a PEG ratio of 1.92. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. PANW's industry had an average PEG ratio of 2.28 as of yesterday's close.

The Security industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 29, which puts it in the top 12% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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