Palo Alto Networks (PANW)
All three bubble tests hold. First, forward P/E is 95.26x against a peer median of 41.38x, a ratio of 2.30x — well above the 1.75x bubble threshold and the highest in its set. Second, earnings are thin against the price: the trailing P/E is 995x and price-to-sales is 28.57x, so current profits are a rounding error next to the market value, and the PEG of 5.11 shows the multiple is five times the expected growth rate. Third, the price therefore requires demand and margin conversion to accelerate, not merely continue: latest-quarter revenue grew 34.4% year over year (PRIMARY, EDGAR), and even that strong pace, simply continued, does not bring a 995x trailing multiple down in any reasonable timeframe — earnings must grow far faster than revenue has. Delivered demand check: the Systems software group's median latest-quarter revenue growth was 24.8% year over year (SEC filings) — demand rising, but not at the pace this price needs.
What would change this label: Moves down to OVERVALUED if delivered earnings catch up so the trailing P/E falls below ~100x and the PEG drops under ~2.0 while revenue growth holds at or above +30% year over year, because then the price would no longer rest on thin earnings. Moves further into bubble-confirming territory if revenue growth slows below +20% year over year while the forward P/E stays above ~72x (1.75x the current peer median); a fall to a forward P/E near ~48x (a ratio near 1.15x) at unchanged estimates would clear the bubble label entirely.
Palo Alto is a real, fast-growing cybersecurity business — sales rose about 34% in a year. But its shares cost about 95 times next year's expected profit and nearly 1,000 times the profit it actually made over the past year, versus about 41 times for its group. The price only works if growth speeds up well beyond what the company has delivered so far, which is what makes this a bubble label rather than just expensive.
Both lines start at 100 on 2020-09-01. Over the full window Palo Alto Networks returned +832.38% and the S&P 500 +118.28% (price returns; dividends not reinvested). Worst peak-to-trough fall for Palo Alto Networks: -36.0% (2025-10-28 to 2026-02-24). Source: Nasdaq official daily history.
What the label rests on
All three bubble tests hold. First, forward P/E is 95.26x against a peer median of 41.38x, a ratio of 2.30x — well above the 1.75x bubble threshold and the highest in its set. Second, earnings are thin against the price: the trailing P/E is 995x and price-to-sales is 28.57x, so current profits are a rounding error next to the market value, and the PEG of 5.11 shows the multiple is five times the expected growth rate. Third, the price therefore requires demand and margin conversion to accelerate, not merely continue: latest-quarter revenue grew 34.4% year over year (PRIMARY, EDGAR), and even that strong pace, simply continued, does not bring a 995x trailing multiple down in any reasonable timeframe — earnings must grow far faster than revenue has. Delivered demand check: the Systems software group's median latest-quarter revenue growth was 24.8% year over year (SEC filings) — demand rising, but not at the pace this price needs. The company’s forward P/E is 95.3× against a peer median of 41.4×. Its own history: UNVERIFIED — no sourced range available. Sector demand read: Delivered demand check: the Systems software group's median latest-quarter revenue growth was 24.8% year over year (SEC filings) — demand rising. Latest-quarter sales growth was +34.4% versus a year earlier (SEC filings).
| Company | Price (Oct 28, 2026) | Forward P/E | Trailing P/E |
|---|---|---|---|
| Palo Alto Networks (PANW) | $398.00 | 95.3× | 995.0× |
| CRWD | $269.00 | 190.4× | 7297.1× |
| NOW | $153.70 | 33.9× | 96.0× |
| FTNT | $182.50 | 51.9× | 64.5× |
| TWLO | $255.95 | 41.4× | 35.4× |
| GEN | $24.08 | 8.0× | 14.1× |
| Peer median | 41.4× |
Multiples: stockanalysis.com (SECONDARY, S&P Global data), fetched Oct 28, 2026. Peer set chosen by sector; the median is the middle value of the set. The label and its numbers were recorded in the programme’s label registry on Oct 28, 2026 and will be scored at 6 and 12 months.
Sales, profit and cash
Gross margin = gross profit divided by sales, from SEC filings.
Free cash flow = cash from operations minus spending on plant and equipment, both from the company’s SEC cash-flow statement. Gaps are quarters where that spending line is not separately tagged in the filings — shown as gaps, never estimated.
| Quarter | Sales | Gross margin | Net income | EPS (GAAP, diluted) | Free cash flow |
|---|---|---|---|---|---|
| Q/E Jul 2026 2026-07-31 | $3.4B | 67.6% | $-282M | — | $1.3B |
| Q/E Apr 2026 2026-04-30 | $3.0B | 67.5% | $-177M | -0.22 | $788M |
| Q/E Jan 2026 2026-01-31 | $2.6B | 73.6% | $432M | 0.61 | $384M |
| Q/E Oct 2025 2025-10-31 | $2.5B | 74.2% | $334M | 0.47 | $1.7B |
| Q/E Jul 2025 2025-07-31 | $2.5B | 73.2% | $254M | — | $934M |
| Q/E Apr 2025 2025-04-30 | $2.3B | 72.9% | $262M | 0.37 | $560M |
| Q/E Jan 2025 2025-01-31 | $2.3B | 73.5% | $267M | 0.38 | $509M |
| Q/E Oct 2024 2024-10-31 | $2.1B | 74.1% | $351M | 0.99 | $1.5B |
| Q/E Jul 2024 2024-07-31 | $2.2B | 73.8% | $358M | — | $465M |
| Q/E Apr 2024 2024-04-30 | $2.0B | 74.1% | $279M | 0.79 | $492M |
| Q/E Jan 2024 2024-01-31 | $2.0B | 74.7% | $1.7B | 4.89 | $655M |
| Q/E Oct 2023 2023-10-31 | $1.9B | 74.8% | $194M | 0.56 | $1.5B |
The last twelve reported quarters. Full 24-quarter history sits in the data pack behind this page. A dash means the figure is not tagged as a standalone quarter in the company’s SEC facts (the usual case is the fourth quarter, which many companies only report inside the full-year filing) — it is missing, not zero.
Earnings: getting better or worse?
Each box is one quarter’s earnings per share (EPS). Green means EPS was higher than the same quarter a year earlier; red means lower; a dash means the figure is not tagged in the filings.
Basis: GAAP diluted EPS from SEC company facts, compared with the same quarter a year earlier.
Key facts
| Item | Value |
|---|---|
| Company (legal name in filings) | Palo Alto Networks Inc |
| Chief executive | Nikesh Arora (source: https://www.cybersecuritydive.com/news/palo-alto-networks-ceo-sees-ai-as-demand-driver-not-a-threat/812585/) |
| Sector | Technology — Systems Software — sells network, cloud and endpoint cybersecurity products |
| Share price (Oct 28, 2026) | $398.00 |
| Market value (market cap) | $328.6B — share price times shares outstanding of 818,000,000 (SEC filings; SEC EDGAR dei EntityCommonStockSharesOutstanding (latest)) |
| Sales, last twelve months | $11.5B |
| Net income, last twelve months | $307M |
| Free cash flow, last twelve months | $4.1B |
| Latest reported quarter | Q/E Jul 2026 (of 24 quarters in the data pack) |
| Six-year price return vs S&P 500 | +832.38% vs +118.28% |
| Worst peak-to-trough fall | -36.0% (2025-10-28 to 2026-02-24) |
What we could not verify
- TTM GAAP diluted EPS could not be summed from company facts because at least one of the last four quarters (typically Q4) has no standalone tagged EPS; trailing P/E is therefore taken from the labelled secondary source in valuation_label.md.
- Own-history P/E range not yet compiled for this company in the Phase 1 batch run; the label rests on peer-median, growth and PEG evidence.
- Guidance record (each quarter scored against the guidance the company gave the quarter before) is not yet compiled for this company — it is a Phase 2 layer. The earnings strip below therefore uses reported EPS versus a year earlier, which is fully sourced from filings.
The IT factor — the most exciting thing the market is overlooking — is not assessed on an X-Ray page. It belongs to the Deep Dive (Phase 2), where it gets the evidence standard it needs. Leadership-era scoring (the six years split by chief executive) is likewise a Phase 2 layer; this page names the current chief executive only, from a sourced profile.
Sources
- SEC EDGAR submissions — Filing index; company legal name.
https://data.sec.gov/submissions/CIK0001327567.json - SEC EDGAR company facts — Quarterly financial spine: revenue, gross profit, net income, GAAP diluted EPS, operating cash flow, PP&E capex, buybacks, dividends, diluted shares.
https://data.sec.gov/api/xbrl/companyfacts/CIK0001327567.json - Nasdaq official daily history — Daily closes for the company; SPY (assetclass=etf) saved as raw/nasdaq_spy_raw.json over identical dates.
https://api.nasdaq.com/api/quote/PANW/historical?assetclass=stocks - Valuation multiples and peer figures — stockanalysis.com (SECONDARY, S&P Global data), fetched Oct 28, 2026; see valuation_label.md in the data pack.
Conventions: earliest-filed value per period, as first reported; cash-flow years-to-date differenced quarter by quarter; EPS never differenced; free cash flow = operating cash flow minus plant-and-equipment spending. This page is a dated snapshot — updates are new versions, never silent edits.