Palo Alto Networks Inc (N:PANW) Information Technology - Communications Equipment | Reports February 25, After Market Closes
Key Takeaways
- The Estimize consensus, which more heavily weights the most accurate analysts and recent estimates, is calling for EPS of $0.41 and revenue of $319.27, slightly higher than the Estimize mean and Wall Street
- Shares of Palo Alto Networks have been hit hard by the broader market sell off and weaker demand for software security solutions
- The company has perennially beat on the top and bottom line reporting better than expected earnings in each of the past 5 quarters
- What are you expecting for PANW?
Cybersecurity firm, Palo Alto Networks (PANW), is scheduled to report fiscal second quarter earnings February 25, after the market closes. The company has perennially beat on the top and bottom line reporting better than expected earnings in each of the past 5 quarters. This quarter might fare differently as investors have grown concerned following decelerated growth from industry leaders, Fortinet Inc (O:FTNT), Checkpoint Systems Inc (N:CKP) and Fireeye Inc (O:FEYE). Consequently, shares of Palo Alto Networks have plunged 29.5% in 2016, by virtue of weaker demand and spending in the software security space.
This quarter the Estimize consensus, a weighted consensus that more heavily represents the most accurate analysts and recent estimates, is calling for EPS of $0.41, 1 cent higher than the Estimize mean and 2 cents higher than Wall Street, while revenue expectations of $319.27, are roughly $2 million greater than the Street. Compared to the same period last year, this projects to be a 113% increase on the bottom line and 46% increase in sales. The company has historically beat EPS measures eclipsing Estimize 80% of the time and Wall Street a resounding 96% of the time. 
A significant source of concern in the software security space has arisen by virtue of the tight spending environment and competition from tech giants like Cisco Systems Inc (O:CSCO). An increasingly competitive landscape could necessitate PANW to increase its spending on sales and marketing thereby limiting its current margin leverage. Moreover, Palo Alto may see limited traction in new product areas such as Traps and WildFire.
Nevertheless, Palo Alto Networks has reported consistent growth over the past 8 quarters with no sign of waning. In its past earnings call, the company reported a 29% YOY growth in its customer base driven by sales investmentments. Furthermore a strong billings base and ramped up adoption for additional subscription services have stimulated sound financials. The company’s strategic focus on expansion should bode favorably for the company come this Thursday.
Do you think PANW can beat estimates?