Based on the dynamics of PANW’s competitive position within the IT security industry, I felt it was unlikely to be a strong idea either way. For the sake of getting a feel for its current valuation, I decided to model the company’s financials in a way to meet its current market price. In other words, get a reading on the markets expectations of its future operating/financial performance based on its current price and decide whether those beliefs are reasonable. So I modeled the following: 2016 revenues of $1.4B. PANW’s fiscal year ends on 7/31, so this is a figure that can be predicted with a reasonable degree of resolution30% year-over-year revenue growth to $1.82B for the upcoming fiscal yearFrom that point, Y/Y 8% relative decay on that figure – 27.6% growth for 2018, 25.4% for 2019, 23.4% for 2020, concluding with 14.2% by 2026. This would effectively increase the company’s revenue by 8x over the next ten years.EBITDA margin that starts at -15% for 2016 and increases by 500 bps each year, such that it ends at +35% by 2026 (i.e., optimistic)Depreciation and amortization expense of 4.5% of revenue annually; capex as 5.7% of revenueWorking capital growth at 2% of sales year-over-yearEffective long-term tax rate of 28% Valuation Graphs