Stock (Symbol) |
Palo Alto Networks (PANW) |
Stock Price |
$184 |
Sector |
| Technology |
Data is as of |
| September 18, 2015 |
Expected to Report |
| Nov 23 |
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 in my opinion the leading cyber security stock to be in — if you’re in it already at a lower level. Palo Alto’s cyber security is the best as it acts as a night club bouncer in letting in only those who should be in. The issue with PANW is its selling for around 100 times earnings. And there’s a reason for the triple digit P/E. Here’s PANW’s qtrly profits during the last 2 yrs: $0.08, 0.10, 0.11, 0.14, 0.15, 0.19, 0.23, and recently $0.28. A track record of record profits ranks with the best stocks ever. The company is also beating the street and upping annual estimates each qtr as business is booming — it has 26,000 customers and has added at least 1000 each qtr the last 15 qtrs. This is a cream of the crop stock, too bad it sells for 100x earnings, else I would be in. |
One Year Chart |
 Note: these charts and tables are as of September 18th when PANW was $184. Today it’s $167. Note at the bottom of the one-year chart PANW’s had triple digit profit growth the last 2 qtrs and estimates show that can continue for — wait for it — four more quarters!
Last qtr the company had 60% sales growth and popped out 100% profit growth. It beat the 25 cent estimate by 3 cents and has beaten by 2-or-3 cents the last 4 qtrs. 2016 earnings estimates have risen from $1.47 to $1.56, 1.60 and $1.71 the last 4 qtrs. Really outstanding statistics. |
Fair Value |
 My Fair Value on PANW is 80x earnings. That equates to a $137 stock price. The company just closed its fiscal year, so we are already pricing in 2016’s estimate. In my opinion the stock should trade between $137 and $209 the next year, but as the company’s earnings estimates get increased (each qtr?) my Fair Value will increase. |
Bottom Line |
 This had been a great sector since Sony got hacked, but recently the cyber stocks have taken a breather and haven’t been moving. Also, the stock’s climb was so swift that it really needs to take a long breather and get ready for the next move higher. Palo Alto Networks is a stock I passed on buying a year ago, and have paid the price in lost growth opportunity. I could buy in now — for 100x earnings — but the sector has weakened as another cyber security stock forecasted below what investors wanted. So for now I’ll continue to keep PANW on my radar. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
