Palo Alto Networks (PANW) Q2 FY7/24 Earnings Review
We may move back to Accumulate, but not today
Palo Alto Networks printed a perfectly good quarter today after the close. Growth slowed a touch but cashflow margins and the balance sheet remain very strong.
The valuation is unchallenging when looking at cashflow multiples vs. other poorer quality companies.
The stock has become very extended in the last 12 months or so - it has been due a selloff, hence our Do Nothing rating - the selloff arrived today (-28% as of writing).
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Technicals > Fundamentals, As Usual
by Alex King
Nothing much wrong with PANW numbers printed today after the close. Sure, revenue growth slowed a little from 20% last quarter vs PY to +19% this quarter vs PY, but if you blink you’d miss that. Gross margins remain strong, so too do EBITDA margins on a TTM basis, and cashflow margins continue to impress. You know many other hardware companies - yes it is, say after me, it’s a hardware company - clicking in >40% TTM unlevered pretax FCF margins? Me either. Balance sheet remains a fortress and the order book huge, most of which has been prepaid (hence those ginormo cashflow margins).
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