Reviewing Paypal (PYPL) & Palo Alto Networks (NYSE:PANW)

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

Analyst Ratings

This is a summary of recent recommendations and price targets for Paypal and Palo Alto Networks, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Paypal 0 8 32 1 2.83
Palo Alto Networks 1 8 32 0 2.76

Paypal currently has a consensus price target of $73.53, indicating a potential upside of 3.60%. Palo Alto Networks has a consensus price target of $163.74, indicating a potential upside of 14.59%. Given Palo Alto Networks’ higher possible upside, analysts plainly believe Palo Alto Networks is more favorable than Paypal.

Valuation & Earnings

This table compares Paypal and Palo Alto Networks’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Paypal $10.84 billion 7.87 $1.40 billion $1.28 55.45
Palo Alto Networks $1.76 billion 7.45 -$216.60 million ($2.46) -58.09

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

Profitability

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

Net Margins Return on Equity Return on Assets
Paypal 12.69% 11.33% 4.85%
Palo Alto Networks -11.97% -15.77% -3.67%

Insider and Institutional Ownership

80.8% of Paypal shares are owned by institutional investors. Comparatively, 80.0% of Palo Alto Networks shares are owned by institutional investors. 6.0% of Paypal shares are owned by company insiders. Comparatively, 4.8% of Palo Alto Networks shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Paypal beats Palo Alto Networks on 11 of the 12 factors compared between the two stocks.

Paypal Company Profile

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.

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.

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