Forensic Analysis · Technology / Software · as of Sep 25, 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.
D · Weak — demands caution
Forensic grade
Safe
Financial health
12.7
Distress distance
Clean
Earnings quality
4
Forensic signals
968.8
P / E (ttm)
1.1%
ROE
$321.7B
Market cap
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 (red flags, auditor quality, say on pay, board independence, going concern, valuation). 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 D (Weak — demands caution) forensic quality grade, and its balance-sheet distress test reads 12.7, placing it in the Safe zone. 4 forensic signals were flagged in its latest SEC filings, led by accruals ratio (% of noa).
What the filings flag
+127.2%
FY2025→FY2026
Accruals ratio (% of NOA).Net operating assets grew +127.2% relative to their own average in FY2026 — scaled by NOA itself, not by total assets, which is what the Forensic Screens card's own accrual row divides by. Accruals are building sharply — a large slice of profit sits in operating assets, not cash. An accrual is a claim that still has to be collected or written down, so the gap resolves in a later period whichever way it goes. The build is led by receivables up +22% against revenue +24%. A cash-flow measure on the same base disagrees: reported earnings ran behind operating cash by 28% of net operating assets, against an accruals ratio of 127.2%. The two are computed differently: the accruals ratio is the change in net operating assets over average net operating assets, while the cash-flow figure is net income less operating cash flow over that same average. Read them as two results, not one.
1.3%
FY2026
Return on invested capital.Return on invested capital is 1.3% in the latest fiscal year and slipping across FY2024–FY2026 from 5.7%. 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 +234% across FY2024–FY2026, from $10.8B to $36.0B, while the return fell 4.4 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: 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%.
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 Equity1.1%
The forensic grade and screens above are free — no account needed. Want the AI investment read on top — the 0–100 rating, thesis, bull-vs-bear, red flags and the 12-month scenario, written from Palo Alto Networks Inc's actual 10-K/10-Q/8-K filings?
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 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.