PALO ALTO NETWORKS INC (NASDAQ:PANW), a strong growth stock, setting up for a breakout.

For growth-minded investors, high revenue and EPS growth are key criteria. Today, we'll examine whether PALO ALTO NETWORKS INC (NASDAQ:PANW) fits the bill for growth investing, particularly as it forms a base and hints at a potential breakout. Remember, due diligence is essential, but PALO ALTO NETWORKS INC has caught our attention on our screen for growth with base formation. It may warrant additional investigation.

Unpacking PANW's Growth Rating

ChartMill assigns a proprietary Growth Rating to each stock. The score is computed by evaluating various growth aspects, like EPS and revenue growth. We take into account the history as well as the estimated future numbers. PANW was assigned a score of 8 for growth:

• PANW shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 11.71%, which is quite good.
• Measured over the past years, PANW shows a very strong growth in Earnings Per Share. The EPS has been growing by 25.52% on average per year.
• PANW shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 13.86%.
• PANW shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 22.59% yearly.
• Based on estimates for the next years, PANW will show a very strong growth in Earnings Per Share. The EPS will grow by 23.51% on average per year.
• The Revenue is expected to grow by 15.53% on average over the next years. This is quite good.

Assessing Health for PANW

ChartMill assigns a Health Rating to every stock. This score ranges from 0 to 10 and evaluates the different health aspects like liquidity and solvency, both absolutely, but also relative to the industry peers. PANW scores a 5 out of 10:

• PANW has an Altman-Z score of 5.65. This indicates that PANW is financially healthy and has little risk of bankruptcy at the moment.
• With a decent Altman-Z score value of 5.65, PANW is doing good in the industry, outperforming 72.24% of the companies in the same industry.
• PANW has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.

A Closer Look at Profitability for PANW

ChartMill assigns a Profitability Rating to every stock. This score ranges from 0 to 10 and evaluates the different profitability ratios and margins, both absolutely, but also relative to the industry peers. PANW scores a 6 out of 10:

• PANW's Return On Assets of 5.99% is fine compared to the rest of the industry. PANW outperforms 77.22% of its industry peers.
• Looking at the Return On Equity, with a value of 19.68%, PANW belongs to the top of the industry, outperforming 85.77% of the companies in the same industry.
• With a decent Return On Invested Capital value of 6.06%, PANW is doing good in the industry, outperforming 76.87% of the companies in the same industry.
• PANW's Profit Margin of 14.64% is fine compared to the rest of the industry. PANW outperforms 78.65% of its industry peers.
• PANW has a better Operating Margin (12.20%) than 80.43% of its industry peers.
• The Gross Margin of PANW (73.86%) is better than 64.41% of its industry peers.

Why is PANW a setup?

ChartMill also assign a Setup Rating to every stock. This setup score also ranges from 0 to 10 and determines to which extend the stock is consolidating. This is achieved by evaluating multiple short term technical indicators. PANW currently has a 8 as setup rating:

Although the technical rating is only medium, PANW does present a nice setup opportunity. We see reduced volatility while prices have been consolidating in the most recent period. There is very little resistance above the current price. There is a support zone below the current price at 184.00, a Stop Loss order could be placed below this zone.

More Strong Growth stocks can be found in our Strong Growth screener.

Our latest full fundamental report of PANW contains the most current fundamental analsysis.

Our latest full technical report of PANW contains the most current technical analsysis.

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.