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Palo Alto (PANW) to Report Q2 Earnings: What's in Store?
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Palo Alto Networks (PANW - Free Report) is scheduled to release second-quarter fiscal 2021 results on Feb 22.
The company projects year-over-year revenue growth of 19-21% to $975-$990 million. The Zacks Consensus Estimate for the same is pegged at $985.7 million, suggesting a 20.7% increase from the year-ago quarter.
The company anticipates non-GAAP earnings in the band of $1.42-$1.44. The consensus mark for the same is pegged at $1.44, indicating a year-over-year climb of 21%.
The company’s earnings beat estimates in all of the trailing four quarters, the average surprise being 15.6%.
Let’s see how things have shaped up prior to the announcement.
Factors at Play
Palo Alto’s fiscal second-quarter results are likely to have benefited from increased demand for cybersecurity solutions on the remote-working wave amid the COVID-19 pandemic. Moreover, the company’s earnings are likely to have been aided by the strong momentum for deal wins, which, in turn, is likely to have boosted revenue growth.
Palo Alto Networks, Inc. Price, Consensus and EPS Surprise
Palo Alto is also gaining from the acquisition of Redlock, which forms the basis of the Prisma public cloud, and Demisto, which forms the basis of Cortex. Prisma and Cortex are likely to have performed well during the fiscal second quarter, which is a positive for billings.
The growing and accelerated migration to cloud, owing to the social-distancing regulations, is likely to have bolstered the adoption of the aforementioned platforms. Notably, the company expects year-over-year billings growth between 17% and 19% ($1.17 billion-$1.19 billion) for the to-be-reported quarter.
Furthermore, FedRAMP recognitions are boosting the adoption of Palo Alto’s products by government organizations. In March 2020, the company announced that its IoT product — ZingboxIoT Guardian — has been deemed “In Process” for the Federal Risk and Authorization Management Program (FedRAMP).
This FedRAMP recognition reflects the U.S. public sector’s trust in Palo Alto’s IoT security solutions. Further, the Prisma Cloud’s “In Process” status is enhancing the visibility of the company’s products to government organizations. This is likely to have encouraged the adoption of its products during the period in discussion.
Nonetheless, higher sales incentives related to the Next-Generation Security products are expected to have hurt the company’s bottom-line performance. Additionally, forex headwinds, and higher marketing and sales expenses might have weighed on the company’s profitability during the fiscal second quarter. Moreover, high acquisition-related expenses are likely to have dragged down margins.
What Our Model Says
Our proven model predicts an earnings beat for Palo Alto this time around. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.
Palo Alto currently carries a Zacks Rank of 3 (Hold) and has an Earnings ESP of 1.33%.
Stocks With Favorable Combinations
Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:
Workday, Inc. (WDAY - Free Report) has an Earnings ESP of +1.16% and carries a Zacks Rank of 2, currently.
Etsy, Inc. (ETSY - Free Report) has an Earnings ESP of +6.90% and currently holds a Zacks Rank of 3.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research SherazMian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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Palo Alto (PANW) to Report Q2 Earnings: What's in Store?
Palo Alto Networks (PANW - Free Report) is scheduled to release second-quarter fiscal 2021 results on Feb 22.
The company projects year-over-year revenue growth of 19-21% to $975-$990 million. The Zacks Consensus Estimate for the same is pegged at $985.7 million, suggesting a 20.7% increase from the year-ago quarter.
The company anticipates non-GAAP earnings in the band of $1.42-$1.44. The consensus mark for the same is pegged at $1.44, indicating a year-over-year climb of 21%.
The company’s earnings beat estimates in all of the trailing four quarters, the average surprise being 15.6%.
Let’s see how things have shaped up prior to the announcement.
Factors at Play
Palo Alto’s fiscal second-quarter results are likely to have benefited from increased demand for cybersecurity solutions on the remote-working wave amid the COVID-19 pandemic. Moreover, the company’s earnings are likely to have been aided by the strong momentum for deal wins, which, in turn, is likely to have boosted revenue growth.
Palo Alto Networks, Inc. Price, Consensus and EPS Surprise
Palo Alto Networks, Inc. price-consensus-eps-surprise-chart | Palo Alto Networks, Inc. Quote
Palo Alto is also gaining from the acquisition of Redlock, which forms the basis of the Prisma public cloud, and Demisto, which forms the basis of Cortex. Prisma and Cortex are likely to have performed well during the fiscal second quarter, which is a positive for billings.
The growing and accelerated migration to cloud, owing to the social-distancing regulations, is likely to have bolstered the adoption of the aforementioned platforms. Notably, the company expects year-over-year billings growth between 17% and 19% ($1.17 billion-$1.19 billion) for the to-be-reported quarter.
Furthermore, FedRAMP recognitions are boosting the adoption of Palo Alto’s products by government organizations. In March 2020, the company announced that its IoT product — ZingboxIoT Guardian — has been deemed “In Process” for the Federal Risk and Authorization Management Program (FedRAMP).
This FedRAMP recognition reflects the U.S. public sector’s trust in Palo Alto’s IoT security solutions. Further, the Prisma Cloud’s “In Process” status is enhancing the visibility of the company’s products to government organizations. This is likely to have encouraged the adoption of its products during the period in discussion.
Nonetheless, higher sales incentives related to the Next-Generation Security products are expected to have hurt the company’s bottom-line performance. Additionally, forex headwinds, and higher marketing and sales expenses might have weighed on the company’s profitability during the fiscal second quarter. Moreover, high acquisition-related expenses are likely to have dragged down margins.
What Our Model Says
Our proven model predicts an earnings beat for Palo Alto this time around. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.
Palo Alto currently carries a Zacks Rank of 3 (Hold) and has an Earnings ESP of 1.33%.
Stocks With Favorable Combinations
Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:
3D Systems Corporation (DDD - Free Report) has an Earnings ESP of +29.6% and carries a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Workday, Inc. (WDAY - Free Report) has an Earnings ESP of +1.16% and carries a Zacks Rank of 2, currently.
Etsy, Inc. (ETSY - Free Report) has an Earnings ESP of +6.90% and currently holds a Zacks Rank of 3.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research SherazMian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>