Why the Market Dipped But Palo Alto Networks (PANW) Gained Today

Palo Alto Networks (PANW) closed the most recent trading day at $203.99, moving +1.28% from the previous trading session. The stock exceeded the S&P 500, which registered a loss of 0.07% for the day. Elsewhere, the Dow saw a downswing of 0.37%, while the tech-heavy Nasdaq appreciated by 0.03%.

Shares of the security software maker witnessed a gain of 2.59% over the previous month, trailing the performance of the Computer and Technology sector with its gain of 5.58%, and the S&P 500's gain of 3.94%.

Analysts and investors alike will be keeping a close eye on the performance of Palo Alto Networks in its upcoming earnings disclosure. The company is forecasted to report an EPS of $0.88, showcasing a 17.33% upward movement from the corresponding quarter of the prior year. Simultaneously, our latest consensus estimate expects the revenue to be $2.5 billion, showing a 14.17% escalation compared to the year-ago quarter.

For the full year, the Zacks Consensus Estimates project earnings of $3.27 per share and a revenue of $9.19 billion, demonstrating changes of +15.14% and +14.42%, respectively, from the preceding year.

Additionally, investors should keep an eye on any recent revisions to analyst forecasts for Palo Alto Networks. Recent revisions tend to reflect the latest near-term business trends. As a result, upbeat changes in estimates indicate analysts' favorable outlook on the business health and profitability.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has remained unchanged. Palo Alto Networks is currently a Zacks Rank #3 (Hold).

Digging into valuation, Palo Alto Networks currently has a Forward P/E ratio of 61.52. This represents a discount compared to its industry average Forward P/E of 76.41.

One should further note that PANW currently holds a PEG ratio of 3.02. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. As the market closed yesterday, the Security industry was having an average PEG ratio of 3.2.

The Security industry is part of the Computer and Technology sector. This industry, currently bearing a Zacks Industry Rank of 52, finds itself in the top 22% echelons of all 250+ industries.

The Zacks Industry Rank is ordered from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Don't forget to use Zacks.com to keep track of all these stock-moving metrics, and others, in the upcoming trading sessions.

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This article originally published on Zacks Investment Research (zacks.com).

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