PANW - Embedded Expectations Analysis - 2020 04 01
ï€ Palo Alto Networks, Inc. (PANW:USA) currently trades above peer averages relative to UAFRS-based (Uniform) earnings, with a 30.5x Uniform P/E. However, even at these levels, the market has bearish expectations for the firm, but management is confident about their capital allocation strategy, branding, and XSOARï€ Specifically, management is confident that the proposed ASR represents the capital allocation strategy that returns value to shareholders, while allowing them sufficient flexibility to achieve their goal. Moreover, they are confident about the new Palo Alto Networks branding and about the capabilities of XSOAR. Finally, they are also confident about the increased sales over time that come from their enterprise agreements
Palo Alto Networks provides a platform that allows enterprises, service providers, and government entities to secure their organizations. The company's platform uses a traffic classification engine that identifies network traffic by application, user, and content and provides security across the network, endpoint, and cloud. The company's product, subscription, and support offerings include: firewall appliances and software; and Panorama, which is a centralized security management solution for global control of various firewall appliances and software deployed on an end-customer's network as well as in their instances in public or private cloud environments as a virtual appliance or a physical appliance.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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