Critical Analysis: PagerDuty (NYSE:PD) & Palo Alto Networks (NASDAQ:PANW)

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

Volatility and Risk

PagerDuty has a beta of 0.97, meaning that its stock price is 3% less volatile than the S&P 500. Comparatively, Palo Alto Networks has a beta of 0.93, meaning that its stock price is 7% less volatile than the S&P 500.

Valuation & Earnings

This table compares PagerDuty and Palo Alto Networks”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PagerDuty	$492.55 million	2.75	$173.85 million	$2.00	8.60
Palo Alto Networks	$11.48 billion	25.29	$307.00 million	$0.51	695.92

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

Analyst Ratings

This is a summary of recent ratings for PagerDuty and Palo Alto Networks, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PagerDuty	2	5	3	0	2.10
Palo Alto Networks	0	11	39	0	2.78

PagerDuty currently has a consensus target price of $12.56, suggesting a potential downside of 26.94%. Palo Alto Networks has a consensus target price of $398.55, suggesting a potential upside of 12.29%. Given Palo Alto Networks’ stronger consensus rating and higher possible upside, analysts clearly believe Palo Alto Networks is more favorable than PagerDuty.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
PagerDuty	37.50%	18.52%	4.84%
Palo Alto Networks	2.67%	8.50%	4.35%

Institutional and Insider Ownership

97.3% of PagerDuty shares are held by institutional investors. Comparatively, 79.8% of Palo Alto Networks shares are held by institutional investors. 6.0% of PagerDuty shares are held by company insiders. Comparatively, 1.4% of Palo Alto Networks shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

About PagerDuty

PagerDuty, Inc. engages in the operation of a digital operations management platform in the United States and internationally. The company’s digital operations management platform collects data and digital signals from virtually any software-enabled system or device and leverage machine learning to correlate, process, and predict opportunities and issues. Its platform includes PagerDuty Incident Management that provides a real-time view across the status of a digital service while incorporating noise reduction to remove false positives; AIOps that applies machine learning to correlate and automate the identification of incidents from billions of events; Process Automation offers centralized design time and run time environment for orchestrating automated workflows that span across departments, technologies, and networks; Customer Service Operations, which is offered to orchestrate, automate, and scale responses to customer impacting issues. It serves various industries, including software and technology, telecommunications, retail, travel and hospitality, media and entertainment, and financial services. PagerDuty, Inc. was founded in 2009 and is headquartered in San Francisco, California.

About Palo Alto Networks

Palo Alto Networks, Inc. provides cybersecurity solutions worldwide. The company offers firewall appliances and software; and Panorama, a security management solution for the global control of network security platform as a virtual or a physical appliance. It also provides subscription services covering the areas of threat prevention, malware and persistent threat, URL filtering, laptop and mobile device protection, DNS security, Internet of Things security, SaaS security API, and SaaS security inline, as well as threat intelligence, and data loss prevention. In addition, the company offers cloud security, secure access, security operations, and threat intelligence and security consulting; professional services, including architecture design and planning, implementation, configuration, and firewall migration; education services, such as certifications, as well as online and in-classroom training; and support services. It sells its products and services through its channel partners, as well as directly to medium to large enterprises, service providers, and government entities operating in various industries, including education, energy, financial services, government entities, healthcare, Internet and media, manufacturing, public sector, and telecommunications. Palo Alto Networks, Inc. was incorporated in 2005 and is headquartered in Santa Clara, California.