PayPal Holdings (PYPL) vs. Palo Alto Networks (PANW) Financial Analysis

PayPal Holdings (NASDAQ: PYPL) and Palo Alto Networks (NYSE:PANW) are both large-cap computer and technology companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, valuation, dividends, institutional ownership, profitability, earnings and risk.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for PayPal Holdings and Palo Alto Networks, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PayPal Holdings 0 8 31 1 2.83
Palo Alto Networks 1 11 29 0 2.68

PayPal Holdings presently has a consensus price target of $69.97, suggesting a potential downside of 4.65%. Palo Alto Networks has a consensus price target of $161.18, suggesting a potential upside of 10.13%. Given Palo Alto Networks’ higher probable upside, analysts plainly believe Palo Alto Networks is more favorable than PayPal Holdings.

Earnings and Valuation

This table compares PayPal Holdings and Palo Alto Networks’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
PayPal Holdings $10.84 billion 8.14 $1.40 billion $1.29 56.89
Palo Alto Networks $1.76 billion 7.64 -$216.60 million ($2.45) -59.74

PayPal Holdings has higher revenue and earnings than Palo Alto Networks. Palo Alto Networks is trading at a lower price-to-earnings ratio than PayPal Holdings, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

82.4% of PayPal Holdings shares are owned by institutional investors. Comparatively, 76.9% of Palo Alto Networks shares are owned by institutional investors. 6.0% of PayPal Holdings shares are owned by insiders. Comparatively, 4.8% of Palo Alto Networks shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares PayPal Holdings and Palo Alto Networks’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
PayPal Holdings 12.69% 11.33% 4.85%
Palo Alto Networks -12.57% -19.72% -4.89%

Volatility and Risk

PayPal Holdings has a beta of 1.03, suggesting that its share price is 3% more volatile than the S&P 500. Comparatively, Palo Alto Networks has a beta of 1.02, suggesting that its share price is 2% more volatile than the S&P 500.

Summary

PayPal Holdings beats Palo Alto Networks on 13 of the 14 factors compared between the two stocks.

About PayPal Holdings

PayPal Holdings, Inc. is a technology platform and digital payments company that enables digital and mobile payments on behalf of consumers and merchants. The Company’s combined payment solutions, including its PayPal, PayPal Credit, Braintree, Venmo, Xoom and Paydiant products, compose its Payments Platform. It operates a two-sided global technology platform that links its customers, both merchants and consumers, around the globe to facilitate the processing of payment transactions, allowing it to connect merchants and consumers. It allows its customers to use their account for both purchase and paying for goods, as well as to transfer and withdraw funds. It enables consumers to exchange funds with merchants using funding sources, which include bank account, PayPal account balance, PayPal Credit account, credit and debit card or other stored value products. It offers consumers person-to-person payment solutions through its PayPal Website and mobile application, Venmo and Xoom.

About Palo Alto Networks

Palo Alto Networks, Inc. offers a next-generation security platform. The Company’s security platform consists of three elements: Next-Generation Firewall, Advanced Endpoint Protection and Threat Intelligence Cloud. Its Next-Generation Firewall delivers application, user and content visibility and control, as well as protection against network-based cyber threats integrated within the firewall through its hardware and software architecture. Its Advanced Endpoint Protection prevents cyber attacks that run malicious code or exploit software vulnerabilities on a range of fixed and virtual endpoints and servers. Its Threat Intelligence Cloud provides central intelligence capabilities, security for software as a service applications and automated delivery of preventative measures against cyber attacks. Its products and services include firewall appliances, panorama, virtual system upgrades, subscription services, support and maintenance, and professional services.

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