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Palo Alto Networks (PANW) Gains As Market Dips: What You Should Know

Zacks Equity Research

Palo Alto Networks (PANW) closed at $227.78 in the latest trading session, marking a +0.94% move from the prior day. This move outpaced the S&P 500's daily loss of 0.26%. Meanwhile, the Dow lost 0.09%, and the Nasdaq, a tech-heavy index, lost 0.24%.

Coming into today, shares of the security software maker had gained 9.74% in the past month. In that same time, the Computer and Technology sector gained 5.19%, while the S&P 500 gained 2.87%.

Investors will be hoping for strength from PANW as it approaches its next earnings release. In that report, analysts expect PANW to post earnings of $1.42 per share. This would mark year-over-year growth of 10.94%. Our most recent consensus estimate is calling for quarterly revenue of $803.06 million, up 22.03% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $5.40 per share and revenue of $2.90 billion. These totals would mark changes of +35.34% and +27.38%, respectively, from last year.

Any recent changes to analyst estimates for PANW should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. PANW is currently a Zacks Rank #3 (Hold).

Digging into valuation, PANW currently has a Forward P/E ratio of 41.82. This represents a no noticeable deviation compared to its industry's average Forward P/E of 41.82.

Investors should also note that PANW has a PEG ratio of 1.79 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Security stocks are, on average, holding a PEG ratio of 2.34 based on yesterday's closing prices.

The Security industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 98, which puts it in the top 39% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

To follow PANW in the coming trading sessions, be sure to utilize Zacks.com.

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