Revenue minus cost of goods sold. Graham's ≥40% threshold identifies businesses with durable pricing power. Note: software and financial companies naturally exceed this; retailers and manufacturers rarely reach it due to their cost structures.
Operating Margin5.0%
Profit after operating costs before interest and taxes. A consistent ≥15% operating margin signals a business with real competitive advantages. Capital-intensive industries (airlines, auto, commodities) rarely hit this threshold due to their structural cost base — compare within industry for context.
Net Income Margin-8.3%
Bottom-line profit as a percentage of revenue. The ≥20% target reflects Buffett's preference for highly profitable businesses. Financial engineering (buybacks, tax optimisation) can inflate this temporarily — look for consistency across multiple years rather than a single strong result.
Financial Health
F
Years to Pay Off Debt-8.9 yrs
Total Debt ÷ Net Income. Lower = stronger balance sheet. Important caveat: utilities, telecoms, REITs, and infrastructure companies carry large structural debt by design — their bond-like cash flows service it comfortably at ratios that would alarm Graham. Compare within sector.
Working Capital vs Long-Term Debt-$3.1B
Working Capital minus Long-Term Debt. Negative results are common and expected in capital-return-focused businesses like Apple, Domino's, and McDonald's — where aggressive buybacks and dividends intentionally reduce book equity. This does not indicate financial distress in high-FCF businesses.
Working Capital-$1.3B
Current Assets minus Current Liabilities. Negative working capital can be a deliberate efficiency strategy in businesses that collect cash before paying suppliers (retailers, fast food franchises, subscription businesses). Assess alongside free cash flow generation for full context.
Valuation
F
Price-to-Book11.06x
Market price vs book value per share. Rarely below 1.5x for quality businesses today. Intangible assets (brand, software, patents) don't appear on the balance sheet under accounting rules, making P/B artificially high for asset-light companies like software and consumer brands.
Cash Flow
A
Free Cash Flow$1.3B
Operating cash flow minus capital expenditures. Buffett's most important metric — cash a business actually generates for its owners after maintaining and growing its asset base. Consistently positive FCF is one of the strongest indicators of a durable, well-run business regardless of accounting profits.
Owner Earnings$162M
Net Income + Depreciation & Amortisation − Capital Expenditures. Buffett's preferred measure of a company's true annual earning power — what could theoretically be distributed to owners without impairing the business. More reliable than reported EPS because it accounts for the capital cost of maintaining the business.
About Palo Alto Networks, Inc.
Palo Alto Networks, Inc. provides cybersecurity solutions in the Americas, Europe, the Middle East, Africa, the Asia Pacific, and Japan. It offers Prisma Access, a secure access service edge solution; Strata Cloud Manager, a network security management solution; and Prisma AIRS to protect customers' entire AI ecosystem. It provides a comprehensive cloud native application protection platform; and Code to Cloud platform, as well as offers VM-Series and CN-Series virtual firewalls for inline network security on multi- and hybrid-cloud environments. It provides security operation solutions through the Cortex platform that includes Cortex XSIAM, an AI-driven security operations platform; Cortex XDR to prevent, detect, and respond to cybersecurity attacks; and Cortex XSOAR for security orchestration, automation, and response; and Cortex Xpanse for attack surface management, as well as offers threat intelligence and advisory services under the Unit 42 name. It provides subscription services covering the areas of threat prevention, malware and persistent threat, URL filtering, laptop and mobile device protection, DNS security, Internet of Things security, SaaS security API, and SaaS security inline; and threat intelligence, data loss prevention, services to resolve network disruptions, and sensitive data protection. It offers professional services, including architecture design and planning, implementation, configuration, and firewall migration; education services, such as certifications, as well as online and in-classroom training; and support services. It sells its products and services through its channel partners, as well as directly to enterprises, service providers, and government entities operating in various industries, including education, energy, financial services, government entities, healthcare, Internet and media, manufacturing, public sector, and telecommunications. The company was incorporated in 2005 and is headquartered in Santa Clara, California.
Palo Alto Networks, Inc. provides cybersecurity solutions in the Americas, Europe, the Middle East, Africa, the Asia Pacific, and Japan. It offers Prisma Access, a secure access service edge solution; Strata Cloud Manager, a network security management solution; and Prisma AIRS to protect customers' entire AI ecosystem. It provides a comprehensive cloud native application protection platform; and Code to Cloud platform, as well as offers VM-Series and CN-Series virtual firewalls for inline network security on multi- and hybrid-cloud environments. It provides security operation solutions through the Cortex platform that includes Cortex XSIAM, an AI-driven security operations platform; Cortex XDR to prevent, detect, and respond to cybersecurity attacks; and Cortex XSOAR for security orchestration, automation, and response; and Cortex Xpanse for attack surface management, as well as offers threat intelligence and advisory services under the Unit 42 name. It provides subscription services covering the areas of threat prevention, malware and persistent threat, URL filtering, laptop and mobile device protection, DNS security, Internet of Things security, SaaS security API, and SaaS security inline; and threat intelligence, data loss prevention, services to resolve network disruptions, and sensitive data protection. It offers professional services, including architecture design and planning, implementation, configuration, and firewall migration; education services, such as certifications, as well as online and in-classroom training; and support services. It sells its products and services through its channel partners, as well as directly to enterprises, service providers, and government entities operating in various industries, including education, energy, financial services, government entities, healthcare, Internet and media, manufacturing, public sector, and telecommunications. The company was incorporated in 2005 and is headquartered in Santa Clara, California.
Metric Explanations
What each dimension measures and where the thresholds come from.
Gross Profit Margin
Revenue minus cost of goods sold. Graham's ≥40% threshold identifies businesses with durable pricing power. Note: software and financial companies naturally exceed this; retailers and manufacturers rarely reach it due to their cost structures.
Operating Margin
Profit after operating costs before interest and taxes. A consistent ≥15% operating margin signals a business with real competitive advantages. Capital-intensive industries (airlines, auto, commodities) rarely hit this threshold due to their structural cost base — compare within industry for context.
Net Income Margin
Bottom-line profit as a percentage of revenue. The ≥20% target reflects Buffett's preference for highly profitable businesses. Financial engineering (buybacks, tax optimisation) can inflate this temporarily — look for consistency across multiple years rather than a single strong result.
Years to Pay Off Debt
Total Debt ÷ Net Income. Lower = stronger balance sheet. Important caveat: utilities, telecoms, REITs, and infrastructure companies carry large structural debt by design — their bond-like cash flows service it comfortably at ratios that would alarm Graham. Compare within sector.
Working Capital vs Long-Term Debt
Working Capital minus Long-Term Debt. Negative results are common and expected in capital-return-focused businesses like Apple, Domino's, and McDonald's — where aggressive buybacks and dividends intentionally reduce book equity. This does not indicate financial distress in high-FCF businesses.
Working Capital
Current Assets minus Current Liabilities. Negative working capital can be a deliberate efficiency strategy in businesses that collect cash before paying suppliers (retailers, fast food franchises, subscription businesses). Assess alongside free cash flow generation for full context.
Price-to-Book
Market price vs book value per share. Rarely below 1.5x for quality businesses today. Intangible assets (brand, software, patents) don't appear on the balance sheet under accounting rules, making P/B artificially high for asset-light companies like software and consumer brands.
Free Cash Flow
Operating cash flow minus capital expenditures. Buffett's most important metric — cash a business actually generates for its owners after maintaining and growing its asset base. Consistently positive FCF is one of the strongest indicators of a durable, well-run business regardless of accounting profits.
Owner Earnings
Net Income + Depreciation & Amortisation − Capital Expenditures. Buffett's preferred measure of a company's true annual earning power — what could theoretically be distributed to owners without impairing the business. More reliable than reported EPS because it accounts for the capital cost of maintaining the business.
Net Income From Continuing Operation Net Minority Interest
-282,000
334,000
Reconciled Depreciation
341,000
89,000
Reconciled Cost Of Revenue
1,106,000
638,000
EBITDA
72,000
501,000
EBIT
-269,000
412,000
Net Interest Income
89,000
105,000
Interest Expense
0
0
Interest Income
89,000
105,000
Normalized Income
-321,000
342,921
Net Income From Continuing And Discontinued Operation
-282,000
334,000
Total Expenses
3,238,000
2,165,000
Total Operating Income As Reported
172,000
309,000
Diluted Average Shares
817,000
709,000
Basic Average Shares
817,000
679,000
Diluted EPS
0
0
Basic EPS
0
0
Diluted NI Availto Com Stockholders
-282,000
334,000
Net Income Common Stockholders
-282,000
334,000
Net Income
-282,000
334,000
Net Income Including Noncontrolling Interests
-282,000
334,000
Net Income Continuous Operations
-282,000
334,000
Tax Provision
13,000
78,000
Pretax Income
-269,000
412,000
Other Income Expense
-530,000
-2,000
Other Non Operating Income Expenses
-595,000
9,000
Gain On Sale Of Security
65,000
-11,000
Net Non Operating Interest Income Expense
89,000
105,000
Total Other Finance Cost
Interest Expense Non Operating
0
0
Interest Income Non Operating
89,000
105,000
Operating Income
172,000
309,000
Operating Expense
2,132,000
1,527,000
Research And Development
779,000
528,000
Selling General And Administration
1,353,000
999,000
Selling And Marketing Expense
1,127,000
820,000
General And Administrative Expense
226,000
179,000
Other Gand A
226,000
179,000
Gross Profit
2,304,000
1,836,000
Cost Of Revenue
1,106,000
638,000
Total Revenue
3,410,000
2,474,000
Operating Revenue
3,410,000
2,474,000
Balance Sheet
2026
2025
Ordinary Shares Number
815,000
692,000
Share Issued
815,000
692,000
Total Debt
2,500,000
346,000
Tangible Book Value
-1,535,000
3,375,000
Invested Capital
29,266,000
8,665,000
Working Capital
-1,280,000
-108,000
Net Tangible Assets
-1,535,000
3,375,000
Capital Lease Obligations
726,000
346,000
Common Stock Equity
27,492,000
8,665,000
Total Capitalization
29,266,000
8,665,000
Total Equity Gross Minority Interest
27,492,000
8,665,000
Stockholders Equity
27,492,000
8,665,000
Gains Losses Not Affecting Retained Earnings
-71,000
67,000
Other Equity Adjustments
-71,000
67,000
Retained Earnings
2,791,000
2,818,000
Capital Stock
24,772,000
5,780,000
Common Stock
24,772,000
5,780,000
Total Liabilities Net Minority Interest
20,968,000
14,871,000
Total Non Current Liabilities Net Minority Interest
11,045,000
7,453,000
Other Non Current Liabilities
1,285,000
913,000
Non Current Deferred Liabilities
7,260,000
6,194,000
Non Current Deferred Revenue
7,009,000
6,098,000
Non Current Deferred Taxes Liabilities
251,000
96,000
Long Term Debt And Capital Lease Obligation
2,500,000
346,000
Long Term Capital Lease Obligation
726,000
346,000
Long Term Debt
1,774,000
Current Liabilities
9,923,000
7,418,000
Current Deferred Liabilities
7,747,000
6,132,000
Current Deferred Revenue
7,747,000
6,132,000
Current Debt And Capital Lease Obligation
Current Debt
Other Current Borrowings
Pensionand Other Post Retirement Benefit Plans Current
1,048,000
398,000
Payables And Accrued Expenses
1,128,000
888,000
Current Accrued Expenses
838,000
665,000
Payables
290,000
223,000
Accounts Payable
290,000
223,000
Total Assets
48,460,000
23,536,000
Total Non Current Assets
39,817,000
16,226,000
Other Non Current Assets
678,000
390,000
Non Current Deferred Assets
3,110,000
2,962,000
Non Current Deferred Taxes Assets
2,443,000
2,416,000
Non Current Accounts Receivable
944,000
855,000
Investments And Advances
4,835,000
5,982,000
Investmentin Financial Assets
4,835,000
5,982,000
Available For Sale Securities
4,835,000
5,982,000
Goodwill And Other Intangible Assets
29,027,000
5,290,000
Other Intangible Assets
7,017,000
723,000
Goodwill
22,010,000
4,567,000
Net PPE
1,223,000
747,000
Accumulated Depreciation
-747,000
Gross PPE
1,970,000
747,000
Leases
366,000
Other Properties
749,000
747,000
Machinery Furniture Equipment
677,000
Land And Improvements
178,000
Current Assets
8,643,000
7,310,000
Other Current Assets
807,000
605,000
Current Deferred Assets
544,000
415,000
Receivables
4,221,000
2,080,000
Other Receivables
592,000
737,000
Accounts Receivable
3,629,000
1,343,000
Allowance For Doubtful Accounts Receivable
-4,000
-14,000
Gross Accounts Receivable
3,633,000
1,357,000
Cash Cash Equivalents And Short Term Investments
3,071,000
4,210,000
Other Short Term Investments
557,000
1,144,000
Cash And Cash Equivalents
2,514,000
3,066,000
Cash Flow
2026
2025
Free Cash Flow
1,254,000
1,687,000
Repayment Of Debt
-160,000
0
Capital Expenditure
-103,000
-84,000
End Cash Position
2,523,000
3,075,000
Beginning Cash Position
2,374,000
2,279,000
Effect Of Exchange Rate Changes
-5,000
Changes In Cash
154,000
796,000
Financing Cash Flow
-197,000
8,000
Cash Flow From Continuing Financing Activities
-197,000
8,000
Net Other Financing Charges
-48,000
-122,000
Proceeds From Stock Option Exercised
1,000
130,000
Net Issuance Payments Of Debt
-150,000
0
Net Short Term Debt Issuance
-160,000
Short Term Debt Payments
-160,000
Investing Cash Flow
-1,006,000
-983,000
Cash Flow From Continuing Investing Activities
-1,006,000
-983,000
Net Investment Purchase And Sale
-803,000
-897,000
Sale Of Investment
470,000
504,000
Purchase Of Investment
-1,273,000
-1,401,000
Net Business Purchase And Sale
-100,000
-2,000
Purchase Of Business
-100,000
-2,000
Net PPE Purchase And Sale
-103,000
-84,000
Purchase Of PPE
-103,000
-84,000
Operating Cash Flow
1,357,000
1,771,000
Cash Flow From Continuing Operating Activities
1,357,000
1,771,000
Change In Working Capital
176,000
845,000
Change In Other Working Capital
764,000
-604,000
Change In Payables And Accrued Expense
446,000
-265,000
Change In Accrued Expense
453,000
-263,000
Change In Payable
-7,000
-2,000
Change In Account Payable
-7,000
-2,000
Change In Prepaid Assets
-92,000
-33,000
Change In Receivables
-942,000
1,747,000
Changes In Account Receivables
-776,000
1,622,000
Other Non Cash Items
183,000
113,000
Stock Based Compensation
460,000
370,000
Unrealized Gain Loss On Investment Securities
524,000
Amortization Of Securities
-1,000
-7,000
Deferred Tax
-57,000
9,000
Deferred Income Tax
-57,000
9,000
Depreciation Amortization Depletion
341,000
89,000
Depreciation And Amortization
341,000
89,000
Operating Gains Losses
13,000
18,000
Net Foreign Currency Exchange Gain Loss
-8,000
Gain Loss On Sale Of PPE
21,000
18,000
Net Income From Continuing Operations
-282,000
334,000
📊Quarterly mode — Graham Fair Value & 7 Criteria require annual data. Switch to Annual for full analysis.
Quarter vs Same Quarter Last Year
YoY strips seasonality
Revenue Growth (YoY)
Prior year: $2.5B▲ $3.4B+34.4%
Revenue growth vs same quarter last year strips seasonality. Consistent double-digit growth is a Buffett hallmark.
Gross Margin
Prior year: 73.2%▲ 67.6%-5.7pp
Buffett: consistent gross margin above 40% signals durable pricing power and competitive moat.
Operating Margin
Prior year: 6.8%▼ 5.0%-1.7pp
Graham: operating margin reflects true business economics before financing. Trend matters as much as level.
Net Margin
Prior year: 10.0%▼ -8.3%-18.3pp
Net margin can be distorted by one-time items, tax timing, or interest costs — compare to operating margin for signal quality.
Quarterly Health Checks
3 Graham/Buffett criteria that are valid and reliable on quarterly data
✅ Adequate Size
Graham required scale for resilience. Quarterly revenue × 4 gives an annualised proxy.
$3.4B/qtr (≈$13.6B ann.)
vs > $1.5B annualised revenue
❌ Financial Condition
Current assets vs current liabilities — a real-time liquidity snapshot. Valid and reliable on quarterly data.
0.87x current ratio
vs ≥ 2.0x
✅ Free Cash Flow
Buffett's most important single metric. A positive FCF quarter means the business generated real cash for owners after maintaining its asset base.
$1.3B
vs Positive
Operating Cash Flow
$1.4B
Latest quarter · Buffett's cash reality check
ROIC
0.4%
Based on latest annual operating income
Return on Invested Capital — Buffett's preferred measure for asset-light businesses. ROIC > 15% consistently signals a durable competitive advantage (moat). More meaningful than P/B for software, pharma, and consumer brand companies where most value is intangible and off-balance-sheet.
Market Cap / Net Assets
11.1x
Net Assets: $27.5B
Asset Context — Software - Infrastructure
Software companies store most of their value in code, IP, recurring revenue, and customer relationships — none of which appear on the balance sheet under GAAP. Book value and Net Assets are poor proxies for intrinsic value here. Focus on ROIC, gross margin trajectory, and free cash flow instead.
⚠️Net margin compressed 18.3pp vs same quarter last year. Common causes: one-time charges (restructuring, write-downs, legal settlements), tax rate changes, or rising interest expense. Check the income statement notes before drawing conclusions about operating health.
⚠️Operating income is positive but net income is negative. This typically reflects below-the-line items: interest expense, impairment charges, tax adjustments, or one-time write-offs. The core business may be healthy — operating margin is a better signal of ongoing profitability here.
Peers & Industry
No auto-detected peers for Software - Infrastructure. You can manually compare PANW against any stock using the Compare tool.
"The management of a business is its most important single factor — more important than market position, patents, or financial structure."
— Benjamin Graham
Capital Allocation & Alignment
Insider Ownership
0.76%
Low — management has little skin in the game
Return on Equity (ROE)
-1.0%
Weak — poor returns on equity
Return on Assets (ROA)
-0.6%
Poor — assets are not generating adequate returns
Share Buybacks (Latest Year)
$1.0B
Management is returning capital to shareholders via buybacks
Debt Trend YoY
+20.7% YoY
Debt is growing — management is leveraging up
Leadership Team
Nikesh Arora
Chairman & CEO
Age 57
Pay: $4,878,498
William Jenkins Jr.
President
Age 59
Pay: $1,667,655
Dipak Golechha
Executive VP & CFO
Age 51
Pay: $1,321,720
Yuming Mao
Founder & Chief Architect
Nicole Hockin
Vice President of Global Communications
Top Institutional Holders
Institution
% Owned
Shares
Blackrock Inc.
77.77%
75,753,509
Vanguard Capital Management LLC
54.54%
53,129,128
State Street Corporation
37.96%
36,979,497
Morgan Stanley
30.23%
29,450,112
Invesco Ltd.
26.33%
25,647,946
Bank of America Corporation
23.29%
22,681,876
JPMORGAN CHASE & CO
22.29%
21,715,578
FMR, LLC
20.59%
20,054,462
⚠️Current ratio below 1 — liquidity risk
Risk Analysis
Beta (Market Risk)
0.91
Low volatility — more stable than the market
Short Interest
2.7% of float
Low short interest — market is not heavily bearish
Debt-to-Equity
0.09x
Conservative balance sheet — low financial risk
Current Ratio
0.87x
Weak liquidity — current liabilities exceed current assets
52-Week Price Range
Low: $139.57Current: $371.76High: $398.88
Currently at 90% of 52-week range
Palo Alto Networks, Inc. (PANW) fundamental analysis — Overall grade F based on profitability, financial health, valuation and cash flow. Graham's
Fair Value: N/A (negative EPS). Gross profit margin: 67.6%. Operating margin: 5.0%. Net margin: -8.3%. Market cap: $304.1B. Sector: Technology. Industry: Software - Infrastructure. Analysis powered by 360investing — free fundamental stock analysis based on Benjamin Graham and Warren Buffett
principles.
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