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Category: Stock Market and Palo Alto
Date: 5 September 2019 Stock Price: $200.49 We take a look at the 4th quarter earnings for their 2019 fiscal year of Palo Alto the cybersecurity and cloud provision company
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About Palo Alto
Palo Alto Networks, the global cybersecurity leader, is shaping the cloud-centric future with technology that is transforming the way people and organizations operate. Our mission is to be the cybersecurity partner of choice, protecting our digital way of life. We help address the world's greatest security challenges with continuous innovation that seizes the latest breakthroughs in artificial intelligence, analytics, automation, and orchestration. By delivering an integrated platform and empowering a growing ecosystem of partners, we are at the forefront of protecting tens of thousands of organizations across clouds, networks, and mobile devices. Our vision is a world where each day is safer and more secure than the one before. For more information visit www.paloaltonetworks.com.
Financial overview of Palo Alto's latest earnings report
The numbers we are interested in (for the quarter):
- Total revenues: $805.8 million (up from $658.5 million from the same quarter of the previous year)
- Cost of sales : $217.4 million (up from $184.5 million for the same quarter of the previous year)
- Net loss: -$20.8 million (down from $7 million for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 95.8 million (up from 92.8 million for the same quarter of the previous year)
- Diluted net income per share: -$0.22 (down from $0.07 for the same quarter of the previous year)
- Cash and cash equivalents: $961.4 million
- Cash and cash equivalents per share: $10.03
- Cash and cash equivalents makes up 5% of Palo Alto's current market capital
- Cash and cash equivalents makes up 14.6% of Palo Alto's total assets
- Accounts receivable: $582 million
- Accounts receivable makes up 8.83% of the group's total assets
- Total shareholders' equity of Palo Alto : $1.586 billion
- Shareholders' equity per share: $16.55
Palo Alto's management commentary on the results and earnings guidance
SANTA CLARA, Calif., Sept. 4, 2019 /PRNewswire/ -- Palo Alto Networks (NYSE: PANW), the global cybersecurity leader, today announced financial results for its fiscal fourth quarter and fiscal year 2019, ended July 31, 2019.
Total revenue for the fiscal fourth quarter 2019 grew 22 percent year over year to $805.8 million, compared with total revenue of $658.5 million for the fiscal fourth quarter 2018. GAAP net loss for the fiscal fourth quarter 2019 was $20.8 million, or $0.22 per diluted share, compared with GAAP net income of $7.0 million, or $0.07 per diluted share, for the fiscal fourth quarter 2018.
Non-GAAP net income for the fiscal fourth quarter 2019 was $146.9 million, or $1.47 per diluted share, compared with non-GAAP net income of $131.7 million, or $1.34 per diluted share, for the fiscal fourth quarter 2018. A reconciliation between GAAP and non-GAAP information is contained in the tables below.
"We had a strong fourth quarter, surpassing a billion dollars in billings within the quarter for the first time, and achieving approximately 180% year-over-year growth in our newer Prisma and Cortex offerings. This year we acquired and released important new technologies and built a robust go-to-market framework for driving their success in the market. It's gratifying to see all the team's hard work translate into strong market results," said Nikesh Arora, chairman and CEO of Palo Alto Networks. "The addition of our proposed acquisition announced today, Zingbox, Inc., a differentiated player in IoT security, continues our strategy of extending our platforms. Zingbox will add to the capabilities of our Next-Generation Firewall by offering a first-of-its kind subscription that will make it easier for organizations to protect IoT devices from attackers. It will also be available as a service on our Cortex platform."
Total revenue for the fiscal fourth quarter 2019 grew 22 percent year over year to $805.8 million, compared with total revenue of $658.5 million for the fiscal fourth quarter 2018. GAAP net loss for the fiscal fourth quarter 2019 was $20.8 million, or $0.22 per diluted share, compared with GAAP net income of $7.0 million, or $0.07 per diluted share, for the fiscal fourth quarter 2018.
Non-GAAP net income for the fiscal fourth quarter 2019 was $146.9 million, or $1.47 per diluted share, compared with non-GAAP net income of $131.7 million, or $1.34 per diluted share, for the fiscal fourth quarter 2018. A reconciliation between GAAP and non-GAAP information is contained in the tables below.
"We had a strong fourth quarter, surpassing a billion dollars in billings within the quarter for the first time, and achieving approximately 180% year-over-year growth in our newer Prisma and Cortex offerings. This year we acquired and released important new technologies and built a robust go-to-market framework for driving their success in the market. It's gratifying to see all the team's hard work translate into strong market results," said Nikesh Arora, chairman and CEO of Palo Alto Networks. "The addition of our proposed acquisition announced today, Zingbox, Inc., a differentiated player in IoT security, continues our strategy of extending our platforms. Zingbox will add to the capabilities of our Next-Generation Firewall by offering a first-of-its kind subscription that will make it easier for organizations to protect IoT devices from attackers. It will also be available as a service on our Cortex platform."
Palo Alto (NYSE: PANW) stock price history
The image below shows the stock price of Palo Alto (NYSE: PANW) over the last 5 years. And its been a pretty good time for Palo Alto stock owners with the stock basically doubling from the $100 it was trading at 5 years ago to the $200 it is trading at now, Thats a 100% return provided in the last 5 years. While its been strong going for the group over the last 5 years, it is trading at closer to its 52 week low than it is to its 52 week high, which suggests to us that the short term sentiment towards the stock is skewed towards the negative side.
Palo Alto (NYSE: PANW) latest stock valuation
So based on the group's latest earnings report what do we value the stock at? Well it is extremely hard to value a stock that is making a loss per share as earnings per share or dividends paid tend to be used in most stock valuation models. But the non-GAAP income per share can be used to assist in the stock valuation. Based on their earnings report our valuation model sets a target price or full value price for Palo Alto at $139.10. We therefore believe the stock is overvalued and expect it to pull back from current levels to more reasonable valuation levels closer to our target price.