DCF Studio

    PANW · NMS · Technology

    Palo Alto Networks, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 21.25

    Market price

    USD 351.72

    Implied upside

    -94.0%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2026-07-31

    Wrong toolThis model values the shares at 6.0% of the market price. A gap that size is a modelling failure rather than a view - most often an unusable beta, a currency or units mismatch, or a cashflow base that does not represent the business. Read the figures below as diagnostics, not as a call.

    Current EV/EBITDA of 185.3x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 21.25-94.0%
    Exit multiple
    USD 52.87-85.0%
    Market price
    USD 351.72

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36CAGR
    RevenueUSD 14.2bnUSD 16.2bnUSD 18.3bnUSD 20.4bnUSD 22.5bnUSD 24.4bnUSD 26.1bnUSD 27.5bnUSD 28.6bnUSD 29.4bn+8.4%
    EBITUSD 1.2bnUSD 1.4bnUSD 1.5bnUSD 1.7bnUSD 1.9bnUSD 2.1bnUSD 2.2bnUSD 2.3bnUSD 2.4bnUSD 2.5bn+8.4%
    NOPATUSD 942.6mUSD 1.1bnUSD 1.2bnUSD 1.4bnUSD 1.5bnUSD 1.6bnUSD 1.7bnUSD 1.8bnUSD 1.9bnUSD 2.0bn+8.4%
    Add depreciation & amortisationUSD 666.1mUSD 762.7mUSD 861.8mUSD 960.9mUSD 1.1bnUSD 1.1bnUSD 1.2bnUSD 1.3bnUSD 1.3bnUSD 1.4bn+8.4%
    Less capital expenditureUSD -375.2mUSD -499.9mUSD -644.3mUSD -806.9mUSD -985.0mUSD -1.2bnUSD -1.4bnUSD -1.6bnUSD -1.8bnUSD -1.9bn+19.9%
    Capex, % of revenue2.6%3.1%3.5%3.9%4.4%4.8%5.2%5.7%6.1%6.5%-
    Less increase in working capitalUSD -819.0mUSD -624.7mUSD -641.2mUSD -641.0mUSD -621.4mUSD -581.0mUSD -519.2mUSD -436.5mUSD -334.9mUSD -217.7m-13.7%
    Free cashflow to firmUSD 414.6mUSD 717.4mUSD 795.8mUSD 872.7mUSD 946.1mUSD 1.0bnUSD 1.1bnUSD 1.1bnUSD 1.2bnUSD 1.2bn+12.5%
    Discount factor0.95780.87860.80600.73940.67830.62230.57080.52370.48040.4407-
    Present valueUSD 397.1mUSD 630.3mUSD 641.4mUSD 645.3mUSD 641.8mUSD 631.0mUSD 613.4mUSD 589.4mUSD 559.9mUSD 525.8m-
    Present Value Of The ForecastUSD 5.9bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.980Reported 0.970, pulled toward 1.0 (Blume)
    Cost of equity9.04%Risk-free + beta x equity risk premium
    Cost of debt6.89%Assumed: risk-free + 200bp (interest expense not reported)
    Market capitalisationUSD 287.9bn99.1% of capital
    Total debtUSD 2.5bn0.9% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC9.01%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 21.25

    62% of EV

    Forecast FCFF, final year
    USD 1.2bn
    Capex at depreciation, working capital in reinvestment
    USD 2.0bn
    Less reinvestment at g/ROIC (27.8% of NOPAT)
    USD -541.9m
    Capitalised
    USD 1.4bn
    ROIC (WACC floor)
    9.0%
    Terminal value, undiscounted
    USD 22.2bn
    Terminal value, discounted
    USD 9.8bn
    Enterprise value
    USD 15.7bn
    Less net debt
    USD -571.0m
    Equity value
    USD 16.2bn

    Exit at 20.0x EBITDA

    Value per shareUSD 52.87

    85% of EV

    Terminal value, undiscounted
    USD 77.0bn
    Terminal value, discounted
    USD 33.9bn
    Enterprise value
    USD 39.8bn
    Less net debt
    USD -571.0m
    Equity value
    USD 40.4bn

    Spread between methods: 85%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.01%30.2930.4130.6330.9931.55
    8.01%25.2625.0424.8424.6624.51
    9.01%21.8221.5421.2520.9720.69
    10.01%19.3219.0818.8318.5918.35
    11.01%17.2917.0816.8816.6716.46

    Outlined: this model. Green text: above today's price of 351.72. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year18.5%9.8%54.4%
    Discount rate-9.0%2.9%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.