Palo Alto Current Financial Leverage
PANW Stock | USD 281.68 3.97 1.43% |
Palo Alto Networks holds a debt-to-equity ratio of 0.0. At this time, Palo Alto's Net Debt is fairly stable compared to the past year. Short Term Debt is likely to climb to about 2.4 B in 2024, whereas Short and Long Term Debt Total is likely to drop slightly above 2 B in 2024. Palo Alto's financial risk is the risk to Palo Alto stockholders that is caused by an increase in debt. In other words, with a high degree of financial leverage come high-interest payments, which usually reduce Earnings Per Share (EPS).
At this time, Palo Alto's Net Debt is fairly stable compared to the past year. Short Term Debt is likely to climb to about 2.4 B in 2024, whereas Short and Long Term Debt Total is likely to drop slightly above 2 B in 2024. Palo |
Palo Alto Financial Leverage Rating
Palo Alto Networks bond ratings play a critical role in determining how much Palo Alto have to pay to access credit markets, i.e., the amount of interest on their issued debt. The threshold between investment-grade and speculative-grade ratings has important market implications for Palo Alto's borrowing costs.Piotroski F Score | 7 Strong |
Beneish M Score | -3.34 Unlikely Manipulator |
Palo Alto Networks Debt to Cash Allocation
As Palo Alto Networks follows its natural business cycle, the capital allocation decisions will not magically go away. Palo Alto's decision-makers have to determine if most of the cash flows will be poured back into or reinvested in the business, reserved for other projects beyond operational needs, or paid back to stakeholders and investors. Many companies eventually find out that there is only so much market out there to be conquered, and adding the next product or service is only half as profitable per unit as their current endeavors. Eventually, the company will reach a point where cash flows are strong, and extra cash is available but not fully utilized. In this case, the company may start buying back its stock from the public or issue more dividends.
The company currently holds 2.27 B in liabilities. Palo Alto Networks has a current ratio of 0.75, indicating that it has a negative working capital and may not be able to pay financial obligations when due. Debt can assist Palo Alto until it has trouble settling it off, either with new capital or with free cash flow. So, Palo Alto's shareholders could walk away with nothing if the company can't fulfill its legal obligations to repay debt. However, a more frequent occurrence is when companies like Palo Alto Networks sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Palo to invest in growth at high rates of return. When we think about Palo Alto's use of debt, we should always consider it together with cash and equity.Palo Alto Common Stock Shares Outstanding Over Time
Palo Alto Assets Financed by Debt
Typically, companies with high debt-to-asset ratios are said to be highly leveraged. The higher the ratio, the greater risk will be associated with the Palo Alto's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Palo Alto, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a a Palo Alto debt ratio should be compared their industry average or other competing firms.Palo Net Debt
Net Debt |
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Understaning Palo Alto Use of Financial Leverage
Palo Alto financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Palo Alto's total debt position, including all of outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Palo Alto assets, the company is considered highly leveraged. Understanding the composition and structure of overall Palo Alto debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business and if it is worth investing in it. Financial leverage can amplify the potential profits to Palo Alto's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Palo Alto's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets).
Last Reported | Projected for Next Year | ||
Net Debt | 1.3 B | 1.4 B | |
Short Term Debt | 2.3 B | 2.4 B | |
Long Term Debt | 1.9 B | 1.1 B | |
Short and Long Term Debt Total | 2.6 B | 2 B | |
Long Term Debt Total | 1.9 B | 1.4 B | |
Short and Long Term Debt | 2.3 B | 1.3 B | |
Net Debt To EBITDA | 1.72 | 1.64 | |
Debt To Equity | 1.17 | 2.14 | |
Interest Debt Per Share | 6.82 | 3.97 | |
Debt To Assets | 0.14 | 0.21 | |
Long Term Debt To Capitalization | 0.14 | 0.12 | |
Total Debt To Capitalization | 0.51 | 0.37 | |
Debt Equity Ratio | 1.17 | 2.14 | |
Debt Ratio | 0.14 | 0.21 | |
Cash Flow To Debt Ratio | 1.41 | 1.06 |
Palo Alto Investors Sentiment
The influence of Palo Alto's investor sentiment on the probability of its price appreciation or decline could be a good factor in your decision-making process regarding taking a position in Palo. The overall investor sentiment generally increases the direction of a stock movement in a one-year investment horizon. However, the impact of investor sentiment on the entire stock market does not have solid backing from leading economists and market statisticians.
Investor biases related to Palo Alto's public news can be used to forecast risks associated with an investment in Palo. The trend in average sentiment can be used to explain how an investor holding Palo can time the market purely based on public headlines and social activities around Palo Alto Networks. Please note that most equities that are difficult to arbitrage are affected by market sentiment the most.
Palo Alto's market sentiment shows the aggregated news analyzed to detect positive and negative mentions from the text and comments. The data is normalized to provide daily scores for Palo Alto's and other traded tickers. The bigger the bubble, the more accurate is the estimated score. Higher bars for a given day show more participation in the average Palo Alto's news discussions. The higher the estimated score, the more favorable is the investor's outlook on Palo Alto.
Palo Alto Implied Volatility | 39.69 |
Palo Alto's implied volatility exposes the market's sentiment of Palo Alto Networks stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if Palo Alto's implied volatility is high, the market thinks the stock has potential for high price swings in either direction. On the other hand, the low implied volatility suggests that Palo Alto stock will not fluctuate a lot when Palo Alto's options are near their expiration.
Some investors attempt to determine whether the market's mood is bullish or bearish by monitoring changes in market sentiment. Unlike more traditional methods such as technical analysis, investor sentiment usually refers to the aggregate attitude towards Palo Alto in the overall investment community. So, suppose investors can accurately measure the market's sentiment. In that case, they can use it for their benefit. For example, some tools to gauge market sentiment could be utilized using contrarian indexes, Palo Alto's short interest history, or implied volatility extrapolated from Palo Alto options trading.
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Is Palo Alto's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Palo Alto. If investors know Palo will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Palo Alto listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth 18.56 | Earnings Share 6.47 | Revenue Per Share 24.27 | Quarterly Revenue Growth 0.193 | Return On Assets 0.0309 |
The market value of Palo Alto Networks is measured differently than its book value, which is the value of Palo that is recorded on the company's balance sheet. Investors also form their own opinion of Palo Alto's value that differs from its market value or its book value, called intrinsic value, which is Palo Alto's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Palo Alto's market value can be influenced by many factors that don't directly affect Palo Alto's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Palo Alto's value and its price as these two are different measures arrived at by different means. Investors typically determine if Palo Alto is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Palo Alto's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.
What is Financial Leverage?
Financial leverage is the use of borrowed money (debt) to finance the purchase of assets with the expectation that the income or capital gain from the new asset will exceed the cost of borrowing. In most cases, the debt provider will limit how much risk it is ready to take and indicate a limit on the extent of the leverage it will allow. In the case of asset-backed lending, the financial provider uses the assets as collateral until the borrower repays the loan. In the case of a cash flow loan, the general creditworthiness of the company is used to back the loan. The concept of leverage is common in the business world. It is mostly used to boost the returns on equity capital of a company, especially when the business is unable to increase its operating efficiency and returns on total investment. Because earnings on borrowing are higher than the interest payable on debt, the company's total earnings will increase, ultimately boosting stockholders' profits.Leverage and Capital Costs
The debt to equity ratio plays a role in the working average cost of capital (WACC). The overall interest on debt represents the break-even point that must be obtained to profitability in a given venture. Thus, WACC is essentially the average interest an organization owes on the capital it has borrowed for leverage. Let's say equity represents 60% of borrowed capital, and debt is 40%. This results in a financial leverage calculation of 40/60, or 0.6667. The organization owes 10% on all equity and 5% on all debt. That means that the weighted average cost of capital is (.4)(5) + (.6)(10) - or 8%. For every $10,000 borrowed, this organization will owe $800 in interest. Profit must be higher than 8% on the project to offset the cost of interest and justify this leverage.Benefits of Financial Leverage
Leverage provides the following benefits for companies:- Leverage is an essential tool a company's management can use to make the best financing and investment decisions.
- It provides a variety of financing sources by which the firm can achieve its target earnings.
- Leverage is also an essential technique in investing as it helps companies set a threshold for the expansion of business operations. For example, it can be used to recommend restrictions on business expansion once the projected return on additional investment is lower than the cost of debt.