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Stock (Symbol)

Palo Alto Networks (PANW)

Stock Price

$193

Sector

Technology

Data is as of

September 18, 2015

Expected to Report

Feb 29 – Mar 4

Company Description

Palo Alto Networks, Inc. is a security company. The Company’s security platform consists of three elements: its Next-Generation Firewall, its Advanced Endpoint Protection, and its Threat Intelligence Cloud. The Company’s Next-Generation Firewall delivers application, user, and content visibility and control, as well as protection against network-based cyber threats integrated within the firewall through its hardware and software architecture. Its Advanced Endpoint Protection prevents cyber-attacks that aim to exploit software vulnerabilities on a range of fixed and virtual endpoints and servers. Source: Thomson Financial

Sharek’s Take

Palo Alto Networks (PANW) is growing 100%, selling for 100x earnings, and is breaking out today. Palo Alto is the top cyber security company in the industry, with superior technology and 26,000 customers — its added 1000 customers per qtr for 16 qtrs. I’ve had PANW on my radar for more than a year, yet haven’t bought because its sold for 100x earnings — and been left behind as it went higher. Still, the company is growing profits 100% a qtr and that is expected to continue well into 2016. Here’s PANW’s qtrly profits during the last 9 qtrs: $0.08, 0.10, 0.11, 0.14, 0.15, 0.19, 0.23, 0.28 and most recently $0.35. As I said last qtr: “A track record of record profits ranks with the best stocks ever”. PANW is breaking out today. Thus I will make a small purchase of PANW in the Growth Portfolio and Aggressive Growth Portfolio, but am cautious as the stock’s P/E is high.

One Year Chart

I came so close to buying PANW during the last correction, but it wasn’t much of a correction. The spike below $150 was a one intra-day mini-crash. Yes the P/E is 109 which is high, but it was 166 a year ago. PANW has a almost perfect earnings table. It has beaten the street and upped estimates in each of the last four qtrs. 2016’s estimate has gone from $1.56 to $1.77 the last 4 qtrs.

Fair Value

When you view the profit history table, you can see the extreme P/E ratios PANW has garnered over the years. My estimate is 100x earnings, which would be a stock that’s a little overvalued now but good upside into 2017. I think this is one stock you have to look past the P/E ratio and buy into, else you’ll never own it.

Bottom Line

This PANW has had a nice climb higher, and just broke out of the recent correction. I feel this stock is appreciated by mutual funds who are constantly accumulating shares.

Palo Alto Networks is the cream-of-the-crop cyber security company, and it doesn’t seem close. At this point you can own the stock or continue to watch from the sidelines. I will take a small position in the Growth Portfolio and Aggressive Growth Portfolio and look to add to it if PANW drops.