How Palo Alto Networks Stock Has Performed



Stock returns

In this series, we’ll look at the performance of cybersecurity stocks since the start of April 2019. Palo Alto Networks stock (PANW) has gained just over 3% since the start of April. The stock though is up by an impressive 33% this year. In comparison, the Prime Cyber Security ETF (HACK) has gained 24% this year.

Palo Alto Networks’ investors have had a stellar run over the past few years. The stock has gained 84.5% in the last three years and 303% in the last five years. Palo Alto Networks stock is currently trading at $250.77, which is 57% above its 52-week low of $160.08 and 3.4% below its 52-week high of $260.63.

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Is Palo Alto stock trading at an attractive valuation?

Palo Alto stock has a compound annual growth rate (or CAGR) of 32% in the last five years. In comparison, the company’s EPS rose at a CAGR of 71% in the last five years. Does PANW stock still have upside potential? Is it trading at a premium or a discount?

PANW is trading at a forward PE multiple of 43.7x for 2019 and at 86.61x for 2020. In comparison, the company’s earnings are estimated to rise by 37% in 2019 and then gain 17.3% in 2020, which suggests that the stock is overvalued at the 2019 multiple. Its earnings are estimated to grow at a CAGR of 27% in the next five years, while sales could rise by 21% annually over the next three years.

Out of 41 analysts covering PANW, 29 recommend a “buy,” and ten recommend a “hold.” There are two “sell” recommendations. The average 12-month price target for PANW is $279.91, indicating the stock is trading at a discount of 12% to average estimates.


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