Palo Alto Networks, Inc. (NYSE:PANW) Is Expected To Breakeven

Palo Alto Networks, Inc.'s (NYSE:PANW): Palo Alto Networks, Inc. provides security platform solutions worldwide. The US$20b market-cap company announced a latest loss of -US$81.9m on 31 July 2019 for its most recent financial year result. Many investors are wondering the rate at which PANW will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for PANW’s growth and when analysts expect the company to become profitable.

See our latest analysis for Palo Alto Networks

PANW is bordering on breakeven, according to the 34 Software analysts. They expect the company to post a final loss in 2020, before turning a profit of US$35m in 2021. So, PANW is predicted to breakeven approximately 2 years from today. In order to meet this breakeven date, I calculated the rate at which PANW must grow year-on-year. It turns out an average annual growth rate of 59% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

NYSE:PANW Past and Future Earnings, October 2nd 2019

I’m not going to go through company-specific developments for PANW given that this is a high-level summary, though, keep in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before I wrap up, there’s one issue worth mentioning. PANW currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in PANW’s case is 90%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on PANW, so if you are interested in understanding the company at a deeper level, take a look at PANW’s company page on Simply Wall St. I’ve also put together a list of pertinent factors you should further examine:

1. Valuation: What is PANW worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether PANW is currently mispriced by the market.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Palo Alto Networks’s board and the CEO’s back ground.

3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.