Signal Ledger LabSignal Ledger valuation · PANW
Palo Alto Networks Inc
What the shares are worth today on our research (cited consensus, company plans and peers, since management sets no usable targets): every line valued at the end of FY2030, net debt rolled forward, then discounted back to Jul 31, 2026.
- Business value at FY2030
- $67B
- FY2030 revenue
- $22B
- FY2030 EPS · P/E
- $2.29 · 38×
- Discount rate (WACC · equity)
- 8.61% · 8.64%
How this is built. Management targets FY2030 exit NGS ARR, which is FY2031 recurring revenue under the run-rate rule, rather than FY2030 consolidated sales; accessible FY2027 revenue consensus corroborates current guidance, then written revenue and GAAP-margin defaults extrapolate the business. Each input below shows its basis: consensus, company plan, peer or rule.
Latest quarter in this research: Q4 FY2026
Reported Sep 1, 2026 for the quarter to Jul 31, 2026 (company release ↗). This valuation already reflects these results (researched Oct 23, 2026).
| Segment | Revenue | vs a year ago | Operating income | Margin |
|---|---|---|---|---|
| Cybersecurity platform | $3.41B | +34% | $0.17B | 5.0% |
- Revenue grew 34% to $3.410B; NGS ARR $9.10B and RPO $21.2B.
- FY2027 revenue guidance $14.10–14.20B and non-GAAP operating margin 29.5%.
- FY2028 40% adjusted FCF margin and FY2030 $20B NGS ARR are not GAAP EBIT or total recognized revenue.
What each business is worth
| Business | Model | FY2030 revenue | Value today | Per share | 2030 multiple | Value from beyond FY2030 |
|---|---|---|---|---|---|---|
| Cybersecurity platform | Margin | $22B | $51B | $62.32 | 30.1× EBIT | 80% |
| All businesses | $22B | $51B | $62.32 |
From 2030 back to today
- Enterprise value at end of FY2030$67B
- Plus net cash at FY2030$4.9B
- Equity value at FY2030$72B
- ÷ (1 + 8.64%)^4.0 years at the cost of equity$52B
- + dividends paid on the way, discounted$0B
This reconciliation checks the published Signal Ledger valuation against the net-debt path. The difference is 1.0%, inside our 5% tolerance.
From businesses to one share
- All businesses, valued today$51B
- − borrowings$1.8B
- − finance leases$0B
- + cash and short-term investments$3.1B
- ÷ diluted shares0.818B
- Signal Ledger valuation$63.91
Year by year to FY2030
| Fiscal year | Revenue | EBITDA | Capex | Free cash flow | Net debt at year end |
|---|---|---|---|---|---|
| FY2027 | $14B | $1.1B | $0.5B | $0.4B | $1.7B cash |
| FY2028 | $17B | $1.6B | $0.6B | $0.6B | $2.4B cash |
| FY2029 | $20B | $2.1B | $0.7B | $0.9B | $3.5B cash |
| FY2030 | $22B | $2.6B | $0.8B | $1.3B | $4.9B cash |
What must be true
- Cybersecurity platform grows revenue from $14.2B in FY2027 to $22.2B in FY2030 (1.6×).
- Cybersecurity platform raises its EBIT margin from 6.1% to 10.1%.
- The company spends $2.8B of capital expenditure through FY2030.
- The company stays net cash throughout (lowest point $1.3B of net cash in FY2026).
What the price implies
To reach $354.92 at our discount rate, Palo Alto Networks Inc would need about $127.8B of FY2030 sales (growth of about 82.7% a year from FY2026) with 10.1% GAAP EBIT margin — versus $22.2B and 10.1% GAAP EBIT margin in our research.
At the research price of $354.92 (2026-10-23), the price asks more than our assumptions overall. These are operating requirements at that price, not additional valuations or forecasts.
If sales and margins changed together
Each row matches the same research price at our unchanged discount rate, by scaling every operating line's margin by one common factor. Sales cover margin and capacity lines only; other valuation lines stay fixed. Margins are revenue-weighted within each metric, before separately modeled corporate costs and eliminations. The conclusion uses the row at our research margins when sales alone can match the price, otherwise the solved row needing the least sales growth; this is a trade-off between growth and profitability, not a forecast.
| FY2030 sales factor | FY2030 sales | FY2026–30 CAGR | Required FY2030 margin | Requirement |
|---|---|---|---|---|
| 1.50× | $33.3B | 30.5% | — | InfeasibleCannot reach the price within 50% EBIT / 100% EBITDA limits. |
| 2.00× | $44.4B | 40.2% | — | InfeasibleCannot reach the price within 50% EBIT / 100% EBITDA limits. |
| 3.00× | $66.5B | 55.2% | 18.0% GAAP EBIT | Within margin guardrails |
| 5.76×At research margins | $127.8B | 82.7% | 10.1% GAAP EBIT | Within margin guardrails |
CAGR uses $11.5B of same-scope FY2026 sales from the published model or its sourced research base, over four fiscal years. “Within margin guardrails” checks numeric limits only, not commercial plausibility. Each line and year must stay at or below 50.0% GAAP EBIT and 100% EBITDA, or our research margin where that is higher; capacity EBIT uses the engine's equipment depreciation. Unsolved margins are not extrapolated.
- Implied discount rate
- 4.2%
- All-business FY2030 sales factor
- 5.76×
The WACC that makes model value equal the price, shifting WACC and cost of equity by the same amount. Model: 8.6% WACC · 8.6% cost of equity.
FY2030 revenue would need to reach $127.8B (model: $22.2B) across the margin and capacity businesses. FY1 stays fixed; the sales change ramps to FY2030 and stays at that factor thereafter.
If only one business changed
Businesses with margin or capacity revenue paths, ordered by value today. Revenue and margin are separate alternatives; these requirements are not added together.
Cybersecurity platform
- Revenue alone
- FY2030 revenue would need to reach $126.5B (model: $22.2B).
- Margin alone
FY2030 EBIT margin would need to reach 50.4% (model: 10.1%).
Mechanical requirements, not forecasts. The separate sales-only and single-business factors are searched from 0.1× to 6×; an unsolved comparison means this business alone cannot get there within those bounds. Single-business revenue changes apply from FY2 onward; margin changes scale the full EBIT or EBITDA margin path. Mixed groups show revenue-weighted EBIT and EBITDA margins separately. Requirements above 100% are not feasible margins. Joint rows instead search non-negative uniform margin factors only up to the EBIT/EBITDA guardrails; the entire margin path scales, including post-FY2030 convergence. Sales and margins change together only in that table. The rate search runs from the largest terminal growth rate plus 0.5 percentage points to 30% WACC.
The discount rate
- Cost of equity
- 8.64%
- WACC
- 8.61%
- 10-year Treasury · model / spot
- 3.87% · 5.13%
r_f 3.87% (5-year average 10-year Treasury yield 3.87% (spot 5.13% on 2026-10-21)) + β 0.95 after Blume adjustment × 5%, rounded to 0.01% (1bp)
methodology §4.5: market-weighted WACC, not rounded
The model uses the recorded 5-year average Treasury yield. The spot yield is shown for context.
Every input, with its source
Show 16 inputs · reported, guidance and rule-based
| Input | Value | Basis | Why |
|---|---|---|---|
| Mature GAAP EBIT margin FY2034 (SBC included)Cybersecurity platform | 20.1% | Rule | Salesforce FY2026 revenue $41.525B and GAAP EBIT $8.331B =>20.0626%, already after $3.509B SBC. Enterprise recurring software sales and R&D economics provide a mature reference, not a same-size guarantee; PANW has different products, acquisition mix and sales costs. Use as the final FY2034 GAAP target, with no extra SBC relief stacked on it. 2030 margin stays unchanged. d18rn0p25nwr6d.cloudfront.net ↗ |
| SBC / revenue FY2030 (expensed)Cybersecurity platform | 15.8% | Rule | Assume the sourced recognized SBC/revenue ratio persists through FY2030; this is a decomposition of the existing GAAP margin, not an additional expense. Annual/quarter period as specified by the filing. sec.gov ↗ |
| Mature SBC / revenue (expensed)Cybersecurity platform | 8.5% | Rule | Research assumption: max(8.5%, half FY2030 SBC ratio) = 8.5000%. Mature actuals: Adobe FY2025 1.942/23.769=8.1703%; Salesforce FY2026 3.509/41.525=8.4503%. Retain at least half the original ratio; 8.5% is a conservative policy floor, not company guidance. For peer-GAAP target this only decomposes the final margin; no second uplift. d18rn0p25nwr6d.cloudfront.net ↗ · adobe.com ↗ |
| Revenue FY2027Cybersecurity platform | $14.2B | Guidance | fade high growth (methodology §4.2), growth 23.3% sec.gov ↗ |
| Revenue FY2030Cybersecurity platform | $22.2B | Guidance | fade high growth (methodology §4.2), growth 13.4% sec.gov ↗ |
| EBIT margin FY2030Cybersecurity platform | 10.1% | Rule | linear path to 10.1% by FY2030 (§4.3 E2: 4.0000 points = 4pp × clamp((CAGR − 1.5%) / 2%, 0, 1); revenue CAGR 17.9% to FY2030; no cited expansion evidence) sec.gov ↗ |
| Maintenance capexCybersecurity platform | 3.8% | Reported | FY2026 PPE/other asset capex $0.440B / revenue; exceeds default maintenance D&A. investors.paloaltonetworks.com ↗ |
| Terminal growthCybersecurity platform | 3.0% | Rule | methodology §4.2 terminal growth for a growth line Valuation methodology §4.2 · Read methodology ↗ |
| WACCDiscount rates | 8.61% | Rule | methodology §4.5: market-weighted WACC, not rounded FRED DGS10 2021-10-20..2026-10-21 |
| Cost of equityDiscount rates | 8.64% | Rule | r_f 3.87% (5-year average 10-year Treasury yield 3.87% (spot 5.13% on 2026-10-21)) + β 0.95 after Blume adjustment × 5%, rounded to 0.01% (1bp) 60 monthly returns vs SPY, 2021-09..2026-09 (adjusted closes) |
| Tax rateDiscount rates | 22.0% | Guidance | Management normalized non-GAAP tax rate for FY2027 22%; discrete acquisition/deferred tax effects not extrapolated. investors.paloaltonetworks.com ↗ |
| Cash and short-term investmentsBalance sheet | $3.1B | Reported | cash, cash equivalents and short-term investments; use consolidated short-term investment total once, including all security classes sec.gov ↗ |
| BorrowingsBalance sheet | $1.8B | Reported | borrowings due within a year plus long-term borrowings; current liabilities fully tagged and reconciled; no current borrowing line; Convertible Senior Notes and Capped Calls Our convertible senior notes issued in June 2020 were fully settled upon maturity as of July 31, 2025. The 2025 Notes were converted prior to or settled on the maturity date of June 1, 2025 in accordance with their terms. sec.gov ↗ |
| Finance leasesBalance sheet | $0.0B | Reported | no finance lease liability reported balance sheet 2026-07-31 |
| SharesBalance sheet | 0.818B | Reported | shares outstanding as of 2026-08-31 cover page of 10-K 0001327567-26-000023 |
| Dividends per yearShareholders | $0.0B | Reported | No common cash dividend. × 0.818B shares investors.paloaltonetworks.com ↗ |
Research notes
- share-count comparison: 0.764B FY 2026-07-31 diluted average; point-in-time denominator retained
- cost of equity 8.64% (β 0.95 after Blume adjustment), WACC 8.6%
- Cybersecurity platform: FY2031–34 mature GAAP EBIT target 20.1%, including SBC 8.5% of revenue (FY2030 15.8%). SBC is expensed once; no future-award dilution or cash addback. Capacity EBIT also depends on actual equipment depreciation.
- Cybersecurity platform: terminal value is 80% of value
- implied FY2030 P/E 38.5× is outside 8–35×
Signal Ledger research built from cited consensus, company plans and peer economics because management sets no usable targets — not a forecast and not investment advice. The research desk (GPT-6.1 (Codex)) gathers filings, guidance and targets; deterministic code applies the samepublished rules to every company and checks the result. Inputs may contain errors; follow the source links before relying on them. Read our valuation methodology →