Forensic Analysis · Computer Hardware · as of Nov 9, 2026
Palo Alto Networks Inc (PANW)
A forensic read on Palo Alto Networks Inc built from its complete SEC filings — financial-health screens, earnings quality, red flags and a price-aware rating. Reproducible math, not opinion.
B · Sound & dependable
Forensic grade
Grey Zone
Financial health
1.5
Distress distance
Clean
Earnings quality
3
Forensic signals
1.7%
ROE
24.5%
Revenue growth
This free snapshot doesn't read filing or proxy text, so the auditor-quality and governance checks that can lower a grade were not evaluated (auditor quality, say on pay, board independence, going concern). Those checks only ever lower a grade, so the full analysis can land below the grade above but never above it — treat it as the most favourable reading, not the settled one.
Palo Alto Networks Inc earns a B (Sound & dependable) forensic quality grade, and its balance-sheet distress test reads 1.5, placing it in the Grey zone. 3 forensic signals were flagged in its latest SEC filings, led by return on invested capital.
What the filings flag
1.8%
FY2026
Return on invested capital.Return on invested capital is 1.8% in the latest fiscal year, against 5.7% in FY2024, having run between 1.8% and 7.3% across FY2024–FY2026 with no direction held. After-tax operating profit was $616M in FY2024 and $452M in FY2026, with operating income at 8.5% of revenue in FY2024, 13.5% in FY2025 and 6.1% in FY2026. The capital base behind it grew +129% across FY2024–FY2026, from $10.8B to $24.7B, while the return fell 3.9 points, so the dollars added over that window earned less than the 5.7% the older base was already earning.
+3.9%/yr
FY2024–FY2026
Share-count dilution.Diluted share count changed +8% over the last 2 years to FY2026 (+3.9%/yr). The count is growing — 708.0M shares in FY2024, 764.0M in FY2026: more stock was issued than repurchased over this window, so aggregate results grew faster than their per-share equivalents. That's ~3.9% shaved off per-share growth every year — total profit has to grow that much just to keep earnings-per-share flat, and a stake held since FY2024 has been diluted ~7%.
15% of rev
FY2026
Stock-based comp load.Stock-based compensation ran 15% of revenue and 43% of free cash flow in FY2026 — about $2.32 per diluted share. No cash left the business to pay it, which is why operating cash flow adds it back. Net of repurchases the diluted count still rose about 3.9% a year across FY2024–FY2026 and that rate is not falling, so total profit has to grow by that much annually before any of it reaches a share. Stock compensation is one source of that issuance; acquisition consideration, equity raises, convertibles and other employee plans also net into the count, and these figures do not separate them.
Key fundamentals
Latest Revenue$11.48B
Revenue Growth YoY+24.5%
Revenue CAGR (2yr)+19.6%
Net Margin2.7%
Free Cash Flow$4.11B
Return on Equity1.7%
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