This article first appeared on GuruFocus.

Palo Alto Networks (NASDAQ:PANW) reports its first quarter fiscal 2026 earnings on Wednesday, November 19, after the market closes. Wall Street estimates $1.89 in EPS and $2.50 billion in revenue, a mid-teens growth in both the top and bottom line. The stock has been roughly flat since the 2-for-1 stock split in December last year, despite the volatility seen along the way.

Last quarter, Palo Alto posted $2.50 billion in revenue, up 16% YoY, driven by strong demand for its expansion from hardware into subscriptions and services. Remaining performance obligations (backlog) grew faster than revenue, reaching $15.8 billion. Growing even faster was next-generation security ARR, which increased 32% year over year to $5.6 billion.

This quarter, analysts will continue to watch the traction in subscription and recurring revenue offerings. Investors will also listen for commentary on competitive pressure, particularly around identity security and secure access service edge (SASE), as rivals bundle more aggressively. A clear outlook and guidance update from management will also matter. Any hint of slower deal velocity or margin compression could limit upside.

Even though it is lagging the market year to date, the valuation remains elevated. Palo Alto trades at 56x forward earnings and 13x forward sales. For the stock to gain momentum, management must show that the platform model is not just theoretical but is converting into sustained high-margin returns and resilient revenue growth.