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

Zacks Equity Research
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Palo Alto Networks (PANW) closed at $248.95 in the latest trading session, marking a -0.1% move from the prior day. This change lagged the S&P 500's 0.1% gain on the day. Meanwhile, the Dow gained 0.15%, and the Nasdaq, a tech-heavy index, lost 0.66%.

Coming into today, shares of the security software maker had gained 3.23% in the past month. In that same time, the Computer and Technology sector gained 6.31%, while the S&P 500 gained 3.95%.

Wall Street will be looking for positivity from PANW as it approaches its next earnings report date. On that day, PANW is projected to report earnings of $1.22 per share, which would represent year-over-year growth of 23.23%. Meanwhile, our latest consensus estimate is calling for revenue of $703.44 million, up 24.04% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.47 per share and revenue of $2.87 billion, which would represent changes of +37.09% and +26.07%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for PANW. These recent revisions tend to reflect the evolving nature of short-term business trends. 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. Within the past 30 days, our consensus EPS projection has moved 7.06% higher. PANW is currently sporting a Zacks Rank of #2 (Buy).

In terms of valuation, PANW is currently trading at a Forward P/E ratio of 45.54. For comparison, its industry has an average Forward P/E of 46.14, which means PANW is trading at a discount to the group.

Also, we should mention that PANW has a PEG ratio of 1.94. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Security industry currently had an average PEG ratio of 2.89 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 38, which puts it in the top 15% 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.

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


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