Palo Alto Networks, Inc. (PANW) — Fundamental Analysis & Key Financial Ratios

Kaplio's reading: Palo Alto Networks, Inc.

Updated on October 24, 2026 · accounts published on September 1, 2026

A fast-growing business that generates strong cash

Palo Alto Networks trades at a P/E of 831.5 over the last 12 months, 2,497 % above the 32.0 median of its sector.

• Is Palo Alto Networks expensive or cheap? Its P/E of 831.5 is 2,497 % above the sector median of 32.0 over the last 12 months.
• How is the business doing? Revenue grew 25 % over the last 12 months and the operating margin is 6.1 %, against a −1.7 % average since 2015.
• How strong is the balance sheet? Debt/equity is 0.09 over the last 12 months and the Altman Z of 7.4 sits in the safe zone.
• What to expect from the next earnings? Results are due November 18, 2026, with consensus EPS of $0.97, after beats in 7 of the last 8 quarters.
• Is it growing with real cash or by diluting shareholders? Free cash flow is 36 % of revenue in fiscal 2026, but stock-based pay takes 16 %, above the healthy 10 % ceiling.

Is Palo Alto Networks expensive or cheap?

Over the last 12 months Palo Alto Networks trades at a P/E of 831.5, against a median of 32.0 across 314 companies in its sector. That leaves an earnings yield of just 0.7 %. Thin accounting profit inflates the P/E. Free cash flow gives a softer picture, with a 2.3 % free cash flow yield. EV/EBITDA of 194.4× is below its five-year average of 246.8×, under the 90 % line the sector uses to call it cheap against its own history. P/B stands at 10.0×. The stock is up 68 % over 12 months and sits 13 % below its 52-week high of $419.91.

How is the business doing?

Revenue rose 25 % over the last 12 months, but EPS fell 73 % over the same period. The operating margin of 6.1 % in fiscal 2026 compares with an average of −1.7 % across fiscal 2015-2026. The business now makes an operating profit after a decade that averaged a loss at that line. Returns are the weak spot. ROIC of 1.0 % over the last 12 months is 7.1 points below the sector median of 8.2 %, and it has not passed 10 % in any of the last ten fiscal years. Net margin is 2.7 % and ROE 1.7 %.

How strong is the balance sheet?

Palo Alto Networks carries little debt. Debt/equity is 0.09 over the last 12 months, and net debt to EBITDA of −0.0× in fiscal 2026 is well inside the 1.5× tolerated for software. Net cash of $0.76 per share ($4.10 of cash less $3.34 of debt) equals only 0.2 % of the share price, a small cushion next to the market value. A current ratio of 0.87 means short-term liabilities exceed short-term assets. The Altman Z of 7.4 sits in the safe zone. A Piotroski score of 3 out of 9 signals weak recent improvement in the fundamentals.

What to expect from the next earnings?

Of the 89 analysts covering Palo Alto Networks, 64 rate it a buy, 23 a hold and 2 a sell. On September 1, 2026 it reported EPS of $1.02 against $0.98 expected, a 4.3 % beat, and it has topped EPS estimates in 7 of the last 8 quarters. For the quarter due November 18, 2026, the consensus is $0.97, below the last reported figure. The 2027 EPS consensus has held at $4.19 for 30 days across 30 analysts, and the 2027 revenue estimates are also steady. The bar is set where it was a month ago.

Is it growing with real cash or by diluting shareholders?

Generic ratios fall short in technology because growth spending and stock-based pay shrink accounting profit, so the sector looks at growth, pricing power and dilution. Palo Alto Networks scores 46 on the Rule of 40 in fiscal 2026, above the elite mark of 40. Its 70.4 % gross margin just clears the 70 % healthy line for software, and free cash flow of 36 % of revenue beats the 20 % threshold. The cost shows elsewhere. Stock-based pay equals 16 % of revenue, above the healthy 10 % ceiling, and revenue per share grew 10.5 % a year over fiscal 2023-2026, short of the 15 % benchmark.

How this was prepared: the data comes from companies' official filings, collected by a professional provider, and from Kaplio's analysis engine (trailing-12-month ratios, 10 years of history and sector medians computed across US-listed companies). The text is written from that data alone, every figure is checked against it before publication, and it is reviewed when the company reports results. This is not investment advice.