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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Palo Alto Networks, Inc. (XNAS:PANW) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
PANW
Name:
PALO ALTO NETWORKS, INC. (XNAS:PANW)
Sector:
554.30M
Industry:
Software�Infrastructure
CEO:
Mr. Nikesh Arora
Total Employees:
11,870
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -363.27% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF PALO ALTO NETWORKS, INC.(PANW) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND SOFTWARE�INFRASTRUCTURE INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
539.2
One Month Price Target:
$542.61
Six Month Price Target :
$559.66
Likely Price in One Year's Time:
Ticker:
$580.13
Likely Trading Range Today Under (Normal Volatility)
$537.63
Price Upper limit ($) :
$542.51
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$510.52
This week:
$475.06
This month :
$410.93
Other Primary facts
Market Cap:
52.86B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
99.64M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
18.6%
-17.01%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$672.08
$609.70
$406.32
$468.70
Medium risk (<10%) entry points
Buy Call
Sell Call
$589.40
Buy Put:
Sell Put:
$576.08
$488.83
$502.32
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
PANW
Sharpe Ratio:
5.72%
Comparison:
PANW, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is 249.93% higher than the industry
& ratio is 151.01% higher than the market/S&P 500 average
Average Returns/Yield of
PANW
Daily returns:
0.16%
Weekly returns:
0.81%
Monthly returns:
3.23%
Yearly returns:
14.38%
Comparison of returns:
Average annual returns/yield (last 3 years) is 169.54% above industry average
Classification:
PANW, is amongst the top 20% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.36
Statistical test of Returns:
PANW has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.67%
Weekly Volatility:
5.97%
Monthly Volatility:
11.94%
Yearly Volatility:
41.34%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.94%
Volatility in last five trading days has been -64.72% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-5.32%
Weekly VaR:
-11.89%
Monthly VaR:
-23.79%
How Much Can the price of
PANW
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-19%
Worst case (decline):
-82.41%
This translates to price declining to:
$435.79
This translates to price declining to:
$94.85
Severe Crash Probability
Risk of crash in next 6/12 months: Very high (>70%)
What is Value at Risk (VaR)?
Risk Fundamentals
PANW is a 67.90% riskier investment compared to the market/S&P 500 & is 43.84% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -19.90% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
PANW
Beta in relation to market/S&P 500--1.13
Expected beta in 1 year's time:
0.853
Expected beta in 3 year's time:
1.206
Unlevered (debt free) Beta:
0.669
Beta in relation to Nasdaq (XNAS):
0.956
Beta in relation to all global stocks::
0.644
Beta Comparison & Analysis
Beta of competitors/peers::
1.147
Beta is -1.57% lower than peers
Average Industry Beta:
1.112
Beta is 1.60% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
-
-
Alpha provided | Alpha Analysis
Alpha provided:
0.279
Alpha is 670.67% above industry average alpha yield
Alpha is 1775% higher than market/& is unsustainably high
Analysis of Cost of Capital of
PANW
Equity cost of capital:
0.109
Equity cost of capital is 1.13% above industry mean WACC
Unlevered (without debt) cost of capital:
6.45%
Before-tax cost of debt:
1.42%
After-tax cost of debt:
1.12%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
1.12%
WACC is -4.87% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$51.89
Revenue growth rate per share of (3Y):
103.53
Annual revenue growth rate is 7.11% above the industry average
EPS:
-$3.98
Expected Annual growth rate of EPS (3Y):
81.25%
Expected future EPS growth rate is 169.69% higher than the Software�Infrastructure industry
Free cash flow (FCF) per share:
$15.89
-
-
Debt per share
$3.01
EBITDA per share
$0.58
Valuation Analysis Today of
PANW
P/E Ratio:
0
P/E Ratio of Competitors/Peers:
54.4
P/E ratio is -100.00% lower than main peers & is higher than the industry
-
PANW is -307.67% undervalued if valued using industry average P/E ratio
-
-
P/S (Price to Sales ratio):
10.39
Price to sales ratio is -5.39% below the industry mean
P/B (Price to book value ratio):
103.53
Price to free cash flow: 33.93
Price to free cash flow ratio is -29.86% lower than the industry
Net income growth rate (3Y):
220.88%
Net income growth rate is -97.40% lower than the industry average net income growth rate
Dividend Analysis
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Dividend History:
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
-
In-depth Debt & Leverage Analysis
Debt to equity ratio:
57.72%
Net debt to equity ratio:
327.37%
Debt to assets ratio:
2.87%
Net debt to assets ratio:
16.29%
Debt-to-asset ratio is -95.88% below industry average
Ability to repay debt:
Interest coverage ratio:
1.03
Interest coverage ratio is -100.49% less than industry average
Looking forward:
Debt growth rate:
-8.63%
Annual debt growth is -108% lower than industry average debt growth rate
Debt repayment rate in last quarter: 0.00%
Analysis of Key Statistics
Correlation of price movement with the market:
0.588
Statistical significance of correlation:
PANW has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.48
Stock price is 22.60% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.48
Correlation of price movement with Nasdaq (^IXIC):
0.018
Covariance of price movement with the market:
0.028
Kurtosis
7.916
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
0.197
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
PANW
Gross Profit Margin Ratio:
278%
Operating Profit Margin Ratio:
-5.12%
Operating profit margin is -56.88% lower than the industry
Net Profit Margin Ratio:
278%
Effective Tax Rate:
-19.22%
Effective tax rate is -161.34% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
-75.08%
Return on equity (ROE) is -170.33% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
-3.74%
Return on assets (ROA) is -1.33% lower than the industry
Financial Leverage:
1.0x
Current Ratio:
0.68
Current ratio is -70.90% below industry average
Cash Conversion Cycle (days):
41.8
Cash conversion cycle is -62.83% below industry average
The remaining useful life of property plant & equipment is: 5.9 years
Stock based compensation to net income ratio:
-66.50%
In-depth Efficiency Analysis
Revenue generated per employee:
435.6K
Each employee generates 11% more revenue than industry average revenue per employee
EBITDA generated per employee:
4.9K
Each employee generates -93% less EBITDA than industry average revenue per employee
Profit generated per employee:
- 32.8K
Each employee generates -257% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
46.7K
Each employee generates 136% more free cash flow than industry average revenue per employee
Assets/Capital per employee
470.7K
Each employee generates 136% more free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
Research & development (R&D) investment growth rate-- 48.47%
Growth rate in R&D investment/expenditure is -1969.23% lower than the industry
Competitors/Peer firms of
PANW
TE Connectivity Ltd (XNYS:TEL)
WIPRO LIMITED (XNYS:WIT)
VMWARE, INC. (XNYS:VMW)
SUNSTONE METALS LTD (XASX:STM)
DELL TECHNOLOGIES INC. (XNYS:DELL)
MOTOROLA SOLUTIONS, INC. (XNYS:MSI)
HP INC. (XNYS:HPQ)
ARISTA NETWORKS, INC. (XNYS:ANET)
BLOCK, INC. (XNYS:SQ)
Current Analyst Ratings
Strong buy�54%
Buy�67%
Hold�42%
Sell�8%
Strong sell�0%
Overall analyst sentiment is: Buy
Income Statement
Period:
TTM
Date:
4/30/22
Revenue:
5.17B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
1.59B
3.59B
1.38B
402.30M
2.47B
2.07B
-
3.85B
1.50M
56.50M
328.30M
58.00M
- 264600.00K
- 389600.00K
- 326800.00K
62.80M
- 389600.00K
Statement of Cash Flow
Date:
Period:
81.70M
Differed Income Tax :
-
Stock Based Compensation :
259.10M
Change in Working Capital :
260.40M
Accounts Receivables:
428.40M
Other Working Capital:
- 109400.00K
Other Non-Cash Items:
91.30M
Net Cash Provided by Operating Activities:
588.90M
Investments in PP&E:
- 34600.00K
Net Acquisitions:
- 17400.00K
Purchases of Investments:
- 439100.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
10/31/21
2022
Q1
2.27B
1.19B
3.46B
812.10M
-
565.60M
4.84B
576.10M
2.73B
471.30M
898.80M
-
908.80M
5.59B
-
10.43B
95.30M
3.67B
-
2.80B
575.40M
7.14B
299.50M
107.00M
2.76B
-
9.91B
2.03B
- 1503700.00K
- 11300.0K
-
October 31, 2021 at 12:00:00 AM
5.43B
518.90M
10.43B
2.09B
3.97B
1.7B
261.20M
-
- 229900.00K
-
-
-
-
38.70M
38.70M
-
397.70M
2.28B
1.88B
588.90M
- 34600.00K
554.30M
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
PANW
2023
2024
2025
2026
2027
$409.50
$440.58
$474.02
$510.00
$548.72