MeritValue

Palo Alto Networks Inc

PANWdata completeness 88%15 fiscal years on file
The thesis, from the filings

Palo Alto Networks Inc earns about 9% on invested capital, barely covering its ~9% cost of capital, but has diluted owners by 145% over 5 years — worth asking whether the growth reaches owners. The estimate methods put fair value between $6.42 and $263.93 a share.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue$4.26B1$5.5B2$6.89B3$8.03B3$9.22B3
Net income−$498.9M4−$267M5$439.7M6$2.58B6$1.13B6
Operating cash flow$1.5B7$1.98B8$2.78B9$3.26B9$3.72B9
Capital expenditure$116M10$192.8M11$146.3M12$156.8M12$246.2M12
Free cash flow (derived)$1.39B7$1.79B8$2.63B9$3.1B9$3.47B9
Total debt$3.23B13$3.68B14$1.99B14——
Cash & equivalents$1.87B15$2.12B16$1.14B17$1.54B17$2.27B17
Diluted shares289.1M295.6M684.5M707.9M709.3M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$110.31
your share of equity
Profit it earned you last year
$15.99
Free cash flow it threw off
$48.92
Debt you’d be carrying
—

10 shares is a claim on $110.31 of net worth that earned you $15.99 and generated $48.92 of cash last year.

iii. Is this a good business?
Moat signal · return on invested capital
9% avg · 5y
FY21 -12%FY22 -8%FY23 18%FY24 27%FY25 20%

It earned about 9% on invested capital against a ~9% cost of capital — roughly what it costs to fund the business, so the numbers show no clear edge.

seeing a moat in the numbers →
Management signal · capital allocation
+145% shares · 5y

Share count is up 145% over 5 years — owners have been diluted. Worth asking what they got for it. Total debt has fallen 38% — deleveraging.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0

The 3 estimate methods that apply put fair value between $6.42 and $263.93 a share. They rest on different assumptions, so where they diverge is the story; the Graham Number is a stricter floor, not a target.

DCF · Growth Exit 10Y
$263.93
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears10
  • fcfGrowth20.0%
  • fcfBase$3.1B
DCF · Growth Exit 5Y
$145.73
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears5
  • fcfGrowth20.0%
  • fcfBase$3.1B
Earnings Power Value
$6.42
assumptions (8)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • normalizedEarnings$439.7M
  • growthAssumed0.0%
Graham Number
$19.93
assumptions (1)
  • grahamMultiplier2250.0%

Different models answer different questions — which to trust when →

v. The price question — last, on purpose
Is today’s price fair?
See live price ↗
Type a price. The ledger answers.
Or set your own belief
FCF growth, next 5 years20.0%
Discount rate (WACC)8.93%
Terminal growth2.5%
At your growth, a share is worth $145.73
The three cases
Bear0.0%$65.66
Base20.0%$145.73
Bull20.0%$145.73

Bear/base/bull growth = 0% / filed history / history + 5pp. Type a price to see the return each case implies.

Default growth 20.0%= this company’s own filed history (median-to-median FCF CAGR, clamped 0–20%). Your adjustments are recorded anonymously. They become the “what do owners actually believe” dataset.

Sources — the receipts
  1. 10-K · period ending 2021-07-31 · accession 0001327567-23-000024 (RevenueFromContractWithCustomerExcludingAssessedTax)
  2. 10-K · period ending 2022-07-31 · accession 0001327567-24-000029 (RevenueFromContractWithCustomerExcludingAssessedTax)
  3. 10-K · period ending 2023-07-31 · accession 0001327567-25-000027 (RevenueFromContractWithCustomerExcludingAssessedTax)
  4. 10-K · period ending 2021-07-31 · accession 0001327567-23-000024 (NetIncomeLoss)
  5. 10-K · period ending 2022-07-31 · accession 0001327567-24-000029 (NetIncomeLoss)
  6. 10-K · period ending 2023-07-31 · accession 0001327567-25-000027 (NetIncomeLoss)
  7. 10-K · period ending 2021-07-31 · accession 0001327567-23-000024 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2022-07-31 · accession 0001327567-24-000029 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2023-07-31 · accession 0001327567-25-000027 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2021-07-31 · accession 0001327567-23-000024 (PaymentsToAcquireProductiveAssets)
  11. 10-K · period ending 2022-07-31 · accession 0001327567-24-000029 (PaymentsToAcquireProductiveAssets)
  12. 10-K · period ending 2023-07-31 · accession 0001327567-25-000027 (PaymentsToAcquireProductiveAssets)
  13. 10-K · period ending 2021-07-31 · accession 0001327567-22-000028 (LongTermDebt)
  14. 10-K · period ending 2022-07-31 · accession 0001327567-23-000024 (LongTermDebt)
  15. 10-K · period ending 2021-07-31 · accession 0001327567-23-000024 (CashAndCashEquivalentsAtCarryingValue)
  16. 10-K · period ending 2022-07-31 · accession 0001327567-24-000029 (CashAndCashEquivalentsAtCarryingValue)
  17. 10-K · period ending 2023-07-31 · accession 0001327567-25-000027 (CashAndCashEquivalentsAtCarryingValue)