PANW Soars 17% In A Single Month, Wait For A Dip To Buy The Stock

We believe there is not much to fear in PANW stock given its overall Strong operating performance and financial condition. But given its Very High valuation, the stock appears Relatively Expensive. Here is our multi-factor assessment.

But no matter how attractive, investing in a single stock carries high risk. Trefis High Quality Portfolio and is designed to reduce stock-specific risk while giving upside exposure

Let’s get into details of each of the assessed factors but before that, for quick background: With $133 Bil in market cap, Palo Alto Networks provides worldwide cybersecurity solutions, including firewall appliances, security management software, and subscription services for threat prevention, malware protection, URL filtering, and device security.

[1] Valuation Looks Very High

This table highlights how PANW is valued vs broader market. For more details see: PANW Valuation Ratios

[2] Growth Is Strong

• Palo Alto Networks has seen its top line grow at an average rate of 18.9% over the last 3 years
• Its revenues have grown 15% from $8.0 Bil to $9.2 Bil in the last 12 months
• Also, its quarterly revenues grew 15.8% to $2.5 Bil in the most recent quarter from $2.2 Bil a year ago.

This table highlights how PANW is growing vs broader market. For more details see: PANW Revenue Comparison

[3] Profitability Appears Strong

• PANW last 12 month operating income was $1.2 Bil representing operating margin of 13.5%
• With cash flow margin of 40.3%, it generated nearly $3.7 Bil in operating cash flow over this period
• For the same period, PANW generated nearly $1.1 Bil in net income, suggesting net margin of about 12.3%

This table highlights how PANW profitability vs broader market. For more details see: PANW Operating Income Comparison

[4] Financial Stability Looks Very Strong

• PANW Debt was $338 Mil at the end of the most recent quarter, while its current Market Cap is $133 Bil. This implies Debt-to-Equity Ratio of 0.3%
• PANW Cash (including cash equivalents) makes up $2.9 Bil of $24 Bil in total Assets. This yields a Cash-to-Assets Ratio of 12.3%

[4] Downturn Resilience Is Strong

PANW has been more resilient than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• PANW stock fell 36.0% from a high of $104.83 on 13 April 2022 to $67.09 on 10 January 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 26 May 2023
• Since then, the stock increased to a high of $208.28 on 18 February 2025 , and currently trades at $197.38

 
2020 Covid Pandemic

• PANW stock fell 46.8% from a high of $41.54 on 18 February 2020 to $22.10 on 18 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 20 July 2020

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read PANW Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – S&P 500, Russell, and S&P midcap. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.