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Palo Alto Networks (PANW) Surpasses Market Returns: Some Facts Worth Knowing

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Palo Alto Networks (PANW - Free Report) ended the recent trading session at $187.42, demonstrating a +1.08% swing from the preceding day's closing price. The stock exceeded the S&P 500, which registered a gain of 0.53% for the day. At the same time, the Dow added 0.38%, and the tech-heavy Nasdaq gained 0.25%.

Shares of the security software maker witnessed a gain of 1.9% over the previous month, beating the performance of the Computer and Technology sector with its loss of 0.75% and the S&P 500's gain of 1.24%.

The investment community will be paying close attention to the earnings performance of Palo Alto Networks in its upcoming release. In that report, analysts expect Palo Alto Networks to post earnings of $0.75 per share. This would mark year-over-year growth of 2.74%. In the meantime, our current consensus estimate forecasts the revenue to be $2.24 billion, indicating a 13.26% growth compared to the corresponding quarter of the prior year.

For the entire fiscal year, the Zacks Consensus Estimates are projecting earnings of $3.08 per share and a revenue of $9.15 billion, representing changes of +8.45% and +13.97%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for Palo Alto Networks. Such recent modifications usually signify the changing landscape of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional 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 has moved 0.05% lower within the past month. At present, Palo Alto Networks boasts a Zacks Rank of #3 (Hold).

Digging into valuation, Palo Alto Networks currently has a Forward P/E ratio of 60.23. This expresses a premium compared to the average Forward P/E of 30.73 of its industry.

It's also important to note that PANW currently trades at a PEG ratio of 3. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. PANW's industry had an average PEG ratio of 2.22 as of yesterday's close.

The Internet - Software industry is part of the Computer and Technology sector. With its current Zacks Industry Rank of 47, this industry ranks in the top 19% of all industries, numbering over 250.

The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained 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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