Palo Alto Networks (PANW) - Get Palo Alto Networks, Inc. Report does not have a good outlook as the cybersecurity company’s assets have remained flat while current liabilities rose, argues Real Money’s Stephen "Sarge" Guilfoyle.
The company recently reported adjusted EPS of $1.64 and a GAAP loss of $1.06 per share for its fiscal first quarter, beating expected results. There was earnings growth of 1% based on revenue of $1.247 billion, which also beat Wall Street’s estimates. Billings rose to $1,381.6 billion or 27.8% from the same period last year.
Palo Alto estimates that its revenue will reach $1.265 billion to $1.285 billion or annual growth of 24% to 26% during the fiscal second quarter. Billings are anticipated to rise to $1.51 billion to $1.53 billion or growth of 24% to 26%.
While the report was generally well received, Guilfoyle is not a fan of the company’s balance sheet even though its cash levels increased during the quarter.
“Total assets are nearly flat over the same three months however, as there has been a decrease in long-term deferred contract costs,” he wrote in a recent Real Money column. “Current liabilities have grown significantly over the reporting period, largely due to growth in net convertible senior notes that were moved up from total liabilities. Total assets still outweigh total liabilities less equity, but I have to be honest. I do not love this balance sheet. Fact is... I don't even like it.”
The cybersecurity industry will remain popular and generating revenue will not be an issue. Cybersecurity companies such as Zscaler (ZS) - Get Zscaler, Inc. Report have better balance sheets, Guilfoyle wrote.