The KEYW (KEYW) & Palo Alto Networks (PANW) Critical Analysis

Palo Alto Networks (NYSE: PANW) and The KEYW (NASDAQ:KEYW) are both technology companies, but which is the better business? We will compare the two companies based on the strength of their valuation, dividends, institutional ownership, analyst recommendations, risk, earnings and profitability.

Insider & Institutional Ownership

80.0% of Palo Alto Networks shares are held by institutional investors. Comparatively, 96.3% of The KEYW shares are held by institutional investors. 4.8% of Palo Alto Networks shares are held by insiders. Comparatively, 4.6% of The KEYW shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Palo Alto Networks and The KEYW’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Palo Alto Networks $1.76 billion 7.45 -$216.60 million ($2.46) -58.09
The KEYW $288.03 million 0.91 -$25.72 million ($0.58) -9.05

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

Analyst Recommendations

This is a summary of recent ratings and price targets for Palo Alto Networks and The KEYW, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Palo Alto Networks 1 8 32 0 2.76
The KEYW 0 3 4 0 2.57

Palo Alto Networks presently has a consensus price target of $163.74, indicating a potential upside of 14.59%. The KEYW has a consensus price target of $9.20, indicating a potential upside of 75.24%. Given The KEYW’s higher probable upside, analysts plainly believe The KEYW is more favorable than Palo Alto Networks.

Profitability

This table compares Palo Alto Networks and The KEYW’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Palo Alto Networks -11.97% -15.77% -3.67%
The KEYW -7.28% -2.29% -1.11%

Volatility & Risk

Palo Alto Networks has a beta of 1, suggesting that its share price has a similar volatility profile to the S&P 500.Comparatively, The KEYW has a beta of 0.81, suggesting that its share price is 19% less volatile than the S&P 500.

Summary

The KEYW beats Palo Alto Networks on 7 of the 13 factors compared between the two stocks.

Palo Alto Networks Company Profile

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.

The KEYW Company Profile

The KeyW Holding Corporation is a holding company. The Company is a provider of engineering and technology solutions to support the collection, processing, analysis and dissemination of information across the full spectrum of the Intelligence, cyber and counterterrorism communities missions. It operates through Government Solutions segment. Its solutions are designed to meet the needs of agile intelligence and the United States government national security priorities through a range of cyber operations and training, geospatial intelligence, cloud and data analytics, engineering, and intelligence analysis and operations offerings. Its Intelligence Surveillance and Reconnaissance solution suite is deployed from a sensor delivery platform. It includes products, including electro-optical, hyperspectral and synthetic aperture radar sensors, and other products that it manufactures and integrates with hardware and software to meet evolving intelligence mission requirements.

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