Stock (Symbol) |
Palo Alto Networks (PANW) |
Stock Price |
$150 |
Sector |
| Technology |
Data is as of |
| October 16, 2016 |
Expected to Report |
| Nov 21 – 25 |
Company Description |
 PANW 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. The Company’s Threat Intelligence Cloud provides central intelligence capabilities, security for software as a service (SaaS) applications, and automated delivery of preventative measures against cyber-attacks. The Company’s PAN-OS operating system contains App-ID, User-ID, site-to-site virtual private network (VPN), remote access secure sockets layer (SSL) VPN, and Quality-of-Service (QoS). Source: Thomson Financial |
Sharek’s Take |
 Palo Alto Networks (PANW) is growing so rapidly it will soon past Cisco as the #1 cyber-security company. Right now Cisco is a much larger player in the cyber-security space but Palo Alto is growing by leaps-and-bounds and Cisco is growing its cyber business moderately. Thus PANW could be the largest cyber-security company in the world in 2-to-3 years. The cyber-security market could grow 15% this year, so market conditions are good. PANW’s profits are superb, and rank with the best stocks of All-Time. Profits the last 8 qtrs have gone from $0.15 to $0.19, 0.23, 0.28, 0.35, 0.40, 0.42 and $0.50. Analysts were down on the stock after the company lowered next qtr’s estimate to $0.53, but that would still be a record! Plus, PANW has beaten the street by a penny the last 3 qtrs. Profit Estimates for the next 4 qtrs are now: $0.53, 0.63, 0.72 and $0.90. Keep in mind the July 2017 qtr estimate is for $0.90, which is PANW’s Q4. So by next fall the company could be making more than $1 a qtr. Here’s what most investors can’t envision: Profits are estimated to climb from $1.67 last year to $2.78 in 2017, $3.80 in 2018 and $4.97 in fiscal year ending July 2019. So if PANW keeps its 54 P/E and makes $5 in profits would mean a $270 stock. |
One Year Chart |
 PANW fell 6% to $136 after it reported earnings last qtr as the company guided down next qtr’s estimates (from $0.56 to $0.53). But the chart shows the stock has been rising recently…hmmm. Perhaps its because they guided 2017 estimates up (from $2.64 to $2.78). 2018 estimates also increased, from $3.68 to $3.80. This company has an exceptional Est. LTG of 41% and analysts Estimate qtrly profits will grow 51%, 58%, 71% and 80% the next 4 qtrs — with record profits each qtr. Palo Alto just had its fiscal year end so we are looking at 2017 now. P/E of 54 is low by historical standards. |
Fair Value |
 My Fair Value on Palo Alto is 70x earnings. That means a $195 Fair Value for the coming year. The following year’s Fair Value is $266. |
Bottom Line |
 Palo Alto Networks is the cyber-security stock investors need to focus on. Although the stock is still well off its highs, that’s not the company’s fault as the P/E’s gone from 100 to 54. This stock has broken its downtrend, but is now in no-mans land as it’s stuck in a range between $125 and $165. I originally took a half-position around the All-Time highs and need to double-up. If this stock comes down a bit I will. PANW ranks 20th of 37 stocks in the Growth Portfolio Power Rankings. The one-year chart doesn’t give me enough confidence to put the stock in the Aggressive Growth Portfolio. |
Power Rankings |
Growth Stock Portfolio
20th of 37Aggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
