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A Look at Palo Alto Networks’ Revenue and Earnings Growth

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Jun. 21 2019, Published 11:01 a.m. ET

Sales rose 29.0% in the first nine months of fiscal 2019

Cybersecurity company Palo Alto Networks (PANW) has seen its shares rise 158.0% in the last five years. The primary driver of a company’s stock price is its revenue and earnings growth. PANW managed to grow its sales from $396 million in fiscal 2013 to $2.27 billion in fiscal 2018, indicating a CAGR (compound annual growth rate) of 41.8%.

PANW’s sales rose to $2.09 billion in the first nine months of fiscal 2019 from $1.62 billion in the previous year’s period, a rise of 29.0% YoY (year-over-year). Though its revenue growth is expected to slow, PANW’s sales should still grow at a robust rate.

Wall Street analysts expect PANW’s revenue to rise at a CAGR of 21.1% between fiscal 2019 and fiscal 2021. While its sales could rise 27.4% in 2019, they’re expected to rise 19.2% in fiscal 2020 and 17.0% in fiscal 2021.

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Earnings growth

PANW’s adjusted earnings are estimated to have grown 40.0% YoY in the first three quarters of fiscal 2019. While its revenue rose 29.0% in the first three quarters, its operating expenses grew at a lower rate of 21.0%, indicating high leverage.

Analysts now expect PANW’s earnings to expand 35.3% to $5.4 per share in fiscal 2019, up from $3.99 in fiscal 2018. Analysts also expect the company’s EPS to rise to $6.24 in fiscal 2020, a rise of 15.6% YoY.

Analysts expect PANW’s earnings to rise at a CAGR of 24.7% in the next five years, well below its EPS growth of 67.2% in the last five years.

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