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Trade-Ideas: Palo Alto Networks (PANW) Is Today's Post-Market Leader Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Palo Alto Networks ( PANW) as a post-market leader candidate. In addition to specific proprietary factors, Trade-Ideas identified Palo Alto Networks as such a stock due to the following factors:

  • PANW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $58.2 million.
  • PANW is up 2.1% today from today's close.

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More details on PANW:

Palo Alto Networks, Inc. offers a network security platform in the Americas, Europe, the Middle East, Africa, the Asia Pacific, and Japan. The company's platform comprises Next-Generation Firewall that delivers application, user, and content visibility and control. Currently there are 10 analysts that rate Palo Alto Networks a buy, no analysts rate it a sell, and 10 rate it a hold.

The average volume for Palo Alto Networks has been 1.1 million shares per day over the past 30 days. Palo Alto has a market cap of $4.0 billion and is part of the technology sector and computer hardware industry. Shares are down 0.1% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Palo Alto Networks as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and feeble growth in the company's earnings per share.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 22.1%. Since the same quarter one year prior, revenues rose by 49.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • PANW has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, PANW has a quick ratio of 2.31, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Compared to other companies in the Communications Equipment industry and the overall market, PALO ALTO NETWORKS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • PALO ALTO NETWORKS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, PALO ALTO NETWORKS INC reported poor results of -$0.41 versus -$0.06 in the prior year. This year, the market expects an improvement in earnings ($0.41 versus -$0.41).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Communications Equipment industry. The net income has significantly decreased by 123.6% when compared to the same quarter one year ago, falling from -$3.52 million to -$7.86 million.

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